Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

QUESTIONS TO MINISTERS

Mr. Peart: On a point of order. I know, Mr. Speaker, that obviously you cannot interfere with the Table in the transference of Questions, but, as it concerns the Parliamentary Secretary for Science, I wonder if it could be explained why a Question on space research which was put down on the Order Paper has been transferred to another Department. I should have thought that the Minister for Science is the Minister responsible. I do not want him to be a post-box for another Department. I want him to be concerned with space research.

Mr. Speaker: I cannot answer the hon. Gentleman. As he knows, the Chair cannot accept responsibility for transfers, and at the moment we have to deal with Private Business.

PRIVATE BUSINESS

RIVER WEAR WATCH (DISSOLUTION) BILL [Lords]

Read the Third time and passed, without Amendment.

SHAKESPEARE BIRTHPLACE, &C., TRUST BILL [Lords]

As amended, considered; to be read the Third time.

DEVON COUNTY COUNCIL BILL [Lords] (By Order)

Read a Second time and committed.

BRITISH TRANSPORT COMMISSION (No. 2) ORDER CONFIRMATION BILL

Read the Third time and passed.

Oral Answers to Questions — QUESTIONS TO MINISTERS

Mr. R. Harris: May I raise a short point of order, Mr. Speaker? Yesterday I put a Question to the Minister of Aviation—Question No. 36—which is recorded in the OFFICIAL REPORT with the words:
Mr. Harris asked the Minister of Aviation".
Could I have it made clear which Mr. Harris it is? The House is fortunate, or perhaps unfortunate, in having two of us. Is it possible to put in "Mr. Reader Harris"?

Mr. Speaker: I am obliged to the hon. Gentleman. I will do my best to retain his name for him.

Oral Answers to Questions — SCIENCE

Non-Ferrous Mineral Reserves, Cornwall

Mr. Hayman: asked the Parliamentary Secretary for Science when the last survey of the non-ferrous mineral reserves of Cornwall was carried out; what was its nature; and what were the results.

The Parliamentary Secretary for Science (Mr. Denzil Freeth): The results of a comprehensive study were published in a Geological Survey memoir on the Metalliferous Mining Region of South-West England in 1956. Airborne geophysical surveys were undertaken in 1957, 1958 and 1959 and at present airborne magnetic surveys are being extended to the offshore areas.

Mr. Hayman: Will the Minister take into account that the 1956 volume which he has mentioned has been described by a mining expert as a tiresome recital of past mining activities and, worse still, that it contains literally hundreds of gross errors of fact? Can the hon. Gentleman say whether the results of the aerial surveys have been published and where they can be found?

Mr. Freeth: I think that I had better write to the hon. Gentleman in order to tell him exactly where, in fact, he can get them, because they have been published in a number of different ways.

Mr. Scott-Hopkins: In view of what was sad in the Finance Bill debate in the House, will not my hon. Friend agree to look again to see if a further survey can now be carried out?

Mr. Freeth: We are at the present time still continuing with the airborne magnetic surveys.

International Co-operation

Mr. J. H. Osborn: asked the Parliamentary Secretary for Science if he will list those projects which, the, cost of which being too great to justify an entire independent programme in the United Kingdom, are considered by his Department to justify international cooperation specifying the nature of such projects and the other countries concerned.

Mr. Denzil Freeth: The United Kingdom is participating in the European Organisation for Nuclear Research; and in the Dragon and Halden atomic reactor experiments of the European Nuclear Energy Agency. I will circulate with the OFFICIAL REPORT lists of the participating countries.
The Anglo-United States Scout satellite programme is a further example. A project for European co-operation in space research is under consideration.
High cost is an important, but not the only factor in deciding whether an international project is desirable.

Mr. Osborn: While thanking my hon. Friend for his reply, may I ask him whether he would not agree that at present co-ordination is desirable, and whether he would say to what extent his Department is in touch with other departments in Europe about this matter?

Mr. Freeth: We are, of course, pleased to work on a basis of international cooperation on scientific matters wherever it seems either possible or desirable.

Mr. Peart: Would the hon. Gentleman give details of the Anglo-French-German programme on space research? I put a Question down about this and it has been transferred, but, perhaps, in view of the supplementary question of the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn), the hon. Gentleman will be able to give the details.

Mr. Freeth: If the hon. Member is referring to the European space research organisation project, there we are waiting for the two sub-committees to report back to the preparatory commission. If he is referring to the proposed launcher organisation, I have nothing further to add to what has already been said.

Following are the lists:

Dragon and Halden experiments.
United Kingdom, Austria, Denmark, Norway, Sweden, Switzerland and the Euratom Commission.
European Organisation for Nuclear Research.
United Kingdom, France, Federal German Republic, Italy, Sweden, Belgium, the Netherlands, Switzerland, Norway, Greece and Yugoslavia.

Civil Research

Mr. J. H. Osborn: asked the Parliamentary Secretary for Science if he will make a statement regarding methods for assisting the development of the results of research in the civil field.

Mr. Harold Davies: asked the Parliamentary Secretary for Science whether he is satisfied that the existing administrative machinery for applying science to industry is adequate; and if he will make a statement.

Mr. Denzil Freeth: The Government must necessarily play a more restricted part in civil than in defence research and development because they are not, in the main, the consumers of the products of civil industry. Nevertheless, in the novel and costly field of atomic energy, civil research and development is mainly conducted by a Government-financed organisation. The N.R.D.C., financed by the Government, supports research and development projects which it judges will, in the long term, give an economic return. The D.S.I.R. is currently working on a number of proposals for civil development contracts and is concerned in a variety of other ways to stimulate the dissemination of research results and their application to industry. Co-operative research associations are financed by industry with supporting grants from D.S.I.R.

Mr. Osborn: Is the Parliamentary Secretary satisfied that this adequately follows up the recommendation of the Advisory Council on Scientific Policy in its Annual Report last year?

Mr. Freeth: My noble Friend and I are never satisfied, but we are pressing on.

Machine Tool Industry Research Association

Mr. Cleaver: asked the Parliamentary Secretary for Science how many companies have joined the Machine Tool Industry Research Association; and whether any companies have refused to take part.

Mr. Denzil Freeth: Membership of the Machine Tool Industry Research Association, which was incorporated in November. 1960, amounts to sixty-four machine tool manufacturers, representing about half of the output of the industry, and twenty manufacturing firms in allied industries. Further efforts will be made to secure the membership of those firms which have not yet responded to invitations to support the research association.

Mr. Cleaver: Can my right hon. Friend suggest any reason why other firms are not co-operating in this?

Mr. Freeth: I think that possibly they do not as yet fully appreciate the benefits which co-operation in research can bring them, if they are small firms, by enabling them to get the benefits of research they could not finance by themselves; and if they are large firms, by getting research done in the research association and thereby relieving their own resources to be devoted to the more competitive aspects of the industry.

Mr. John Hall: Is my hon. Friend aware that in Russia, to quote but one example, there are some 10,000 to 13,000 graduate designers in the machine tool industry as against some 130 or 150 in this country? Will my hon. Friend see, therefore, that the machine tool industry increases the effort it is now trying to put into research?

Mr. Freeth: I fully accept my hon. Friend's desire to get more research and development in the machine tool industry, and it was, of course, with that in mind that the Machine Tool Industry Research Association has been but recently set up.

Agricultural Research (Pigs)

Mr. Ridley: asked the Parliamentary Secretary for Science whether the Agricultural Research Council is considering what is the best pig for the British bacon curing industry; and what are the results.

Mr. Denzil Freeth: No, Sir. The Council organises and co-ordinates research with a view to acquiring scientific knowledge on such matter as the breeding, nutrition, housing and management of pigs, bearing in mind the problems of the pig industry. The results of experiments are published and are available to the farmer to help him in producing the most appropriate type of pig for his own particular circumstances, and also to the advisory services of the agricultural Departments.

Mr. Ridley: Would not my hon. Friend agree that it is vitally important that we should in fact grow the right pig in this country, and that there is no point, in view of the extremely heavy competition in the pig industry, in not developing the best pigs for our particular needs? Will he get the Agricultural Research Council to look at this question again, because it is vitally important?

Mr. Freeth: On the question of who should do research into what is in fact the right type of pig, my noble Friend and I take the view that this is primarily a matter for the pig producers. The Pig Industry Development Authority is actively engaged in research in trying to find the best type of pigs for the various sections of the pig-meat trade.

Diesel-Engined Road Vehicles

Mr. Nabarro: asked the Parliamentary Secretary for Science what recent assessment he has made of injurious effects upon health and road safety of the increasing volumes of dark and black smoke from exhausts of diesel oil-powered road vehicles; and, in view of this continuing pubic nuisance, what remedial measures he proposes.

Mr. Denzil Freeth: Repeated studies by the Medical Research Council have shown no evidence of a higher incidence of lung cancer or respiratory disease among persons exposed to greater amounts of diesel exhaust fumes than


the general population. No figures are at present available to indicate the effect of diesel smoke on road safety. The Department of Scientific and Industrial Research is collaborating with my right hon. Friend the Minister of Transport in his efforts to ensure the correct maintenance and operation of vehicles which will satisfactorily eliminate the nuisance from this source.

Mr. Nabarro: Will not my hon. Friend agree that, though there may be no evidence of lung cancer from these fumes, they are none the less asphyxiating, highly unpleasant, and a grave menace on our roads? As this is a scientific problem which has now engaged the attention of D.S.I.R. and other agencies for up to ten years within my knowledge, does not my hon. Friend agree that the efforts being made to provide a practical solution are evidently inadequate?

Mr. Freeth: I would remind my hon. Friend that my right hon. Friend the Minister of Transport made new Regulations on 10th July, which will be laid before the House within a few days, in order to prevent misuse of the excess fuel device to obtain extra power, thereby creating extra diesel smoke.

Sir L. Ungoed-Thomas: Apart from getting scientific information, would the hon. Gentleman use a little common sense about this? Does he not appreciate that these diesel fumes obscure the view on the roads and add to the slipperiness of the roads in wet weather, and that that is extremely dangerous? Will he not see that something is done to ensure that this nuisance on the roads is done away with?

Mr. Freeth: The hon. and learned Gentleman's question is really for the Minister of Transport.

Sir L. Ungoed-Thomas: No.

Mr. Nabarro: asked the Parliamentary Secretary for Science what progress has been made by the Department of Scientific and Industrial Research, and other research institutions and agencies, in the filtration of exhaust fumes from diesel oil-powered road vehicles, with a view to de-colourisation and decontamination: and whether he will make a statement on the progress of

tests by the Department of Scientific and Industrial Research of American equipment for this purpose.

Mr. Denzil Freeth: The Warren Spring Laboratory of the D.S.I.R. has examined methods for removing smoke from the exhausts of diesel powered road vehicles, but no device yet tested has proved satisfactory. A Swiss device is at present undergoing tests. No commercially-produced American device is yet available for tests.

Mr. Nabarro: Following my supplementary question on Question No. 6, could my hon. Friend say whether research in this important field is confined only to D.S.I.R.? Are the motor industry research bodies co-operating? Are there any other agencies co-operating with D.S.I.R.? Can my hon. Friend take more purposive steps to get a coordinated and co-operative research effort in this very grave matter?

Mr. Freeth: D.S.I.R. is, of course, working very closely with the Ministry of Transport in this matter, and, in addition, I am informed that the British Internal Combustion Engine Research Association is undertaking a programme of fundamental studies of the combustion process in diesel cylinders, and we hope that this may lead to remedial measures being possible.

Mr. Ellis Smith: Is the Parliamentary Secretary aware that friends of mine who are experts in the manufacture of engines of this kind, namely, Gardner's of Eccles, Manchester, inform me that if these engines were decently maintained there would be no trouble? Would the hon. Gentleman consult the Minister of Transport rather than sidetrack the issue, so that a solution can be brought about to this serious matter?

Sir L. Ungued-Thomas: Yes. Get something done.

Mr. Freeth: I would accept the information which the hon. Member has been given by his constituents. It is a fact that correct setting of the injectors and their proper maintenance and operation provides a simple and effective remedy. I would point out to the hon. Member, however, that regulations are a matter for my right hon. Friend, not my noble Friend.

Mr. P. Williams: Is my hon. Friend aware that it is no use blanketing this problem with a smoke-screen of words and that what is really needed is action which will make our highways livable on and drivable on?

Mr. Freeth: That is also a question for my right hon. Friend.

Mr. J. T. Price: Whatever scientific aspects this question may involve, is the hon. Gentleman aware that this infernal nuisance, of which hon. Members in all parts of the House are now complaining, is an actual, legal offence against the Clean Air Act and the Motor Vehicles (Construction and Use) Regulations, and will he consult not only the Minister of Transport but also the Home Secretary to see if some power can be applied to this problem so that the police will take more forceful action in enforcing the laws which exist—

Mr. Speaker: That is a long way away from the Question and from the questions which can properly be put to this Minister.

Cancer

Mrs. Hart: asked the Parliamentary Secretary for Science if he is aware that an intensive survey is needed to prove or disprove the hypothesis that the incidence of cancer is associated with geological formation; and if Her Majesty's Government will increase the scale of their grants for cancer research to provide, inter alia, for such a survey.

Mr. Denzil Freeth: Work on geographical variation in cancer incidence is already being supported by the Medical Research Council and will be extended if any promising new lead is found.

Mrs. Hart: Is the Parliamentary Secretary aware that the scale of grants is not enough for this purpose? Is he aware, for example, of the statement made at the annual meeting of the British Empire Cancer Campaign and does he appreciate that the remarks in the Press from Professor Alexander Haddow indicate that the hon. Gentleman was talking complete nonsense when he said a few weeks ago in the House that it was ideas and not money that were needed for research? Will the hon. Gentleman change his mind?

Mr. Freeth: No, Sir. I said in answer to a Question in the House and in the debate on 10th July that I am informed by the Medical Research Council that when any promising lead on cancer and similar diseases arises this will not be held up through lack of Government funds. My noble Friend has not at any time refused the Medical Research Council money for which it has asked to promote promising leads of this nature.

Mr. Pavitt: asked the Parliamentary Secretary for Science if he will state the amount of money spent by the Government on cancer research during the years 1955, 1956, 1957, 1958, 1959, and 1960; and what is the estimated expenditure for the next five-year period.

Mr. Denzil Freeth: The Medical Research Council's expenditure from public funds on cancer research was approximately £327,000 in 1955–56; £400.000 in 1956–57; £486,000 in 1957–58; £499,000 in 1958–59; £583,000 in 1959–60; £650,000 in 1960–61, and it will amount to about £783,000 in 1961–62. No estimates can be made for periods beyond the current financial year.
Research relevant to cancer is carried out in the universities and medical schools with funds provided by the University Grants Committee, as well as in the National Health Service during the normal course of the treatment of patients, but it is not possible to make a reliable estimate of the sums involved.

Mr. Pavitt: While welcoming the increase over the years, may I ask whether the Parliamentary Secretary will assure the House that he will resist any possible inroads which might be attempted into this amount of money because of the economic stringency in the country?

Mr. Freeth: I am certain that the Medical Research Council would never submit to any reductions in work on a vital subject such as this which was leading to exploration of lines which were definitely promising of a final result.

Sir G. Nicholson: Can the Minister assure the House that in his opinion the discovery of a cure for cancer is not being held up by lack of funds?

Mr. Freeth: That is the information which I have been given by the Medical Research Council, which is responsible


over the whole field. The Council's grants are used to ensure that the total effort from all sources is adequate and balanced, not the other way round.

Social Sciences (Research Council)

Mrs. Hart: asked the Parliamentary Secretary for Science what consideration he has given to the need for a social sciences research council.

Mr. Denzil Freeth: The Council for Scientific and Industrial Research is reviewing the support given by the Department in this field. One aspect of the review is the desirability or otherwise of a separate human or social sciences research council. My noble Friend will consider carefully the views of the Research Council when he has received them.

Mrs. Hart: Will the Parliamentary Secretary ask his noble Friend to seek the views of leading social scientists and sociologists in this country about the contribution which a continual search unit might be able to make to Government policy and Government research?

Mr. Freeth: I hope that such experts in this field will either send their views to the Department of Scientific and Industrial Research or to my noble Friend, who will pass them on so that a full and proper survey of the desirability or not of having a social science research council can properly be made.

Mr. Peart: Why wait? Surely the hon. Gentleman knows that there is a need for it. Everybody accepts that. Why not action now?

Mr. Freeth: My noble Friend put his finger on it when he said in a previous Session in another place that it is possibly premature to have a research council for the social sciences and that if one wishes to encourage the social sciences there may well be other means of so doing, in the universities for example, without the need to set up a special research council.

Mrs. Hart: Is the hon. Gentleman aware that it is not a question of encouraging the social sciences but of enabling them to make the contribution which they can make?

Mr. Freeth: The hon. Lady has made up her mind. My noble Friend will

await the report of the Council for Scientific and Industrial Research on this problem.

Radioactive Wastes

Mr. Maxwell-Hyslop: asked the Parliamentary Secretary for Science what progress the Atomic Energy Authority has made in the conversion of radioactive wastes into glass for easier and safer disposal.

Mr. Denzil Freeth: I am advised by the Atomic Energy Authority that its work on the fixation of highly radioactive wastes in solid glass-like materials is progressing satisfactorily. A pilot scale plant for the further development of the process is being constructed.

Mr. Maxwell-Hyslop: Would my hon. Friend indicate where it is proposed to dispose of this glass-like waste when the process has been completed?

Mr. Freeth: The Atomic Energy Authority aims to bury the glass cylinders in concrete pits to eliminate any risk of contaminating local surface water. It will also be necessary for the storage caverns to be equipped with cooling devices to remove the heat caused by radioactive decay during the first years of storage.

Graduate Scientists

Mr. Stones: asked the Parliamentary Secretary for Science if he will state the annual output of graduate scientists in the United Kingdom.

Mr. Denzil Freeth: The annual output of qualified scientists, which was under 5,000 in 1956, will be approximately 6,900 in the present academic year. In the same period the annual output of qualified technologists has grown from 6,200 to over 9,600.

Mr. Stones: Is the Parliamentary Secretary aware that in 1958, the last year for which I have figures, there was an output of 96,509 graduates in scientific and technical faculties in the United States and that in the same year in the U.S.S.R. there were 114,600 graduates in the same subjects, whilst in Brit tin in 1957 there were only 10,879 graduates? I understand from information provided by H.M. Stationery Office that the present aim of Her Majesty's Government is to


increase the annual output from 10,000 to 20,000 in the next ten to fifteen years. [HON. MEMBERS: "Speech."] Is the hon. Gentleman aware that even if this aim is achieved we shall be still seriously lagging behind the two Powers mentioned? Will not he urge upon his noble Friend the need for co-ordination of all the powers available to make up this leeway?

Mr. Freeth: I think that the hon. Member in his speech—[HON. MEMBERS: "Oh."]—slightly tended to compare like with unlike. It is not always fair to make a comparison with the United States and U.S.S.R., because standards differ. I would remind the hon. Member that the Statistics Committee of the Advisory Council on Scientific Policy is presenting a report—[HON. MEMBERS: "Speech."]—that is what I am meant to make—is presenting a report in the fairly near future estimating the output of graduate scientists over the next ten years, and the needs of the nation.

Medical Research

Mr. Pavitt: asked the Parliamentary Secretary for Science what proposals he now has for improving and increasing medical research.

Mr. Denzil Freeth: The whole field of medical research is kept under review by the Medical Research Council which takes every opportunity of promoting new and promising lines of study. The Council's programme of research is continually expanding and its expenditure has more than trebled over the last ten years. There is every reason to believe that expenditure will continue to rise.

Mr. Pavitt: Is the Parliamentary Secretary aware that that Answer is totally unsatisfactory and that the United States are now spending about 4,000 million dollars on medical research? Is he aware that this is costing this country quite a lot in its bill for imported pharmaceutical products? Would the hon. Gentleman do something a little more than is indicated in his Answer?

Mr. Freeth: The hon. Member should recall that the Medical Research Council does not have a monopoly of medical research in this country. A great deal

is carried out in the universities and the hospitals and by private organisations. Therefore, the expenditure by the Medical Research Council does not cover all the money that the nation spends on this research?

Mr. Pavitt: In view of that, would not the hon. Gentleman arrange for some planning and co-ordination instead of having this ramshackle arrangement for research?

Mr. Freeth: The duty of the Medical Research Council, which it carries out satisfactorily, is to review the nation's efforts in this field and make good the gaps which otherwise might be there.

Farm Buildings

Mr. Harold Davies: asked the Parliamentary Secretary for Science if he is aware that almost £20 millions a year is being paid for farm building subsidies; and if he will establish a research programme for farm building.

Mr. Denzil Freeth: My information is that the annual total of grants towards the cost of farm buildings in the United Kingdom is about £7 million. With regard to the second part of the Question, I would refer the hon. Member to my reply to the hon. Member for Deptford (Sir L. Plummer) on 16th May last.

Mr. Davies: Is the hon. Gentleman aware that, according to the Report of the Farm Building Association, there is a dire need for some research? Is he aware that my information is that half of 1 per cent. of the subsidies given to agriculture, if devoted to this, would provide a first-class research organisation that might bring a great return to the country? I do not want to elaborate on it, but would the hon. Gentleman look into the problem?

Mr. Freeth: I am grateful to the hon. Member far bringing the whole question to the notice of the House. The Agricultural Research Council is advised by the Farm Buildings Research Committee under the chairmanship of Sir Walter Drummond. The hon. Member no doubt will have noticed the report issued to the Press last week about progress in the first year of the experimental farm building scheme. We have great hopes of this.

Research Results (Publication)

Mr. Ainsley: asked the Parliamentary Secretary for Science what contribution the Government makes towards the cost of publication of the results of research undertaken at its own institutes.

Mr. Denzil Freeth: The Government contribute in many ways, both directly and indirectly, to the cost of publication of such research, though full details are not readily available. The research councils for which my noble Friend is responsible have made provision for spending about £250,000 in the current year on printing, publication and other forms of publicity.

Mr. Ainsley: Is the Parliamentary Secretary aware of the great numbers of magazines which we are receiving from other countries, revealing the vast amount of research work going on there compared with the meagre allowance that his Department is making for the publication of students' papers, which is resulting in delay? Will he speed up the research work so that industry and all other Government Departments can take advantage of this scientific age?

Mr. Freeth: A great many scientific publications are not the direct responsibility of my noble Friend, but the research councils for which he is responsible go out of their way to see that the results of their research are published in all the relevant leading journals.

Mathematicians

Mr. G. Elfed Davies: asked the Parliamentary Secretary for Science if he will make a statement upon the effect of the shortage of mathematicians upon the British scientific research effort.

Mr. Denzil Freeth: Scientific research depends quite as much on quality as quantity. In quality, our mathematicians are second to none, and I do not, therefore, fear for our progress on this account. It is, however, difficult to obtain mathematicians for research and teaching. For the action Her Majesty's Government are taking to increase the number of mathematicians, I would refer the hon. Member to my right hon. Friend the Minister of Education's speech in this House on 10th July.

Mr. Davies: Will not the hon. Gentleman recognise that that reply is based upon a scientific research programme which hon. Members on both sides of the House consider is not good enough? Unless this programme is speeded up and increased, the position will become infinitely worse. Does not the hon. Gentleman think that it is his responsibility to have discussions with the Minister of Education and not merely to wait for Questions from this side of the House? Will not he accept his responsibility?

Mr. Freeth: The hon. Gentleman knows that there is, naturally, very close contact at all levels between Government Departments, but the steps which can or should be taken, or which are being taken, to increase the number of mathematicians are the responsibility of my right hon. Friend the Minister of Education and of the universities.

Mr. Peart: Will the hon. Gentleman jerk the Minister of Education into action? It was obvious from the science debate last week and from the education debate yesterday that both sides of the House recognise that there is a crisis in the supply of mathematics teachers at all levels. When are we to have action?

Mr. Freeth: The hon. Gentleman obviously missed the Answer which my right hon. Friend the Minister of Education gave to one of my hon. Friends only a little while ago at the end of Question Time.

Geophysics

Mr. Owen: asked the Parliamentary Secretary for Science what are his proposals for increasing research into geophysics.

Mr. Denzil Freeth: The D.S.I.R. at present operates thirteen research grants with six different universities or colleges, and six further grants are contemplated. In addition, it is intended to extend the use of seismic methods by the Geological Survey. Geophysical (research is also carded out in other establishments for which my noble Friend is not directly responsible.

Mr. Owen: Is the hon. Gentleman aware that we are familiar with the annual report of the Geological Survey? To the best of my knowledge, however, there has never been a geophysical survey in Britain. Will he recognise that at this stage—again, this is to the best of my knowledge—there are singularly few chairs in our universities catering for this vital branch of research? Will he consider this more closely in the interests of our future development?

Mr. Freeth: As I have said, there are a large number of other establishments, such as the Meteorological Office and the Astronomer-Royal at Hurstmonceaux, where geophysical research is undertaken. But, as I said in reply to a question last May, we are having difficulty in recruiting the necessary qualified manpower.

Industry (Co-operative Research)

Mr. Peart: asked the Parliament Secretary for Science what are his proposals for encouraging more cooperative research in industry.

Mr. Denzil Freeth: The Council for Scientific and Industrial Research will continue to give co-operative research associations full support. The Council plans to increase its overall annual grant contributions, provided that industry continues to give an increasing measure of support. My noble Friend and I lose no opportunities of explaining the benefits which industry can obtain from a greater use of co-operative research.

Marine Nuclear Propulsion

Mr. Rankin: asked the Parliamentary Secretary for Science if he will make a statement on his Department's research into marine nuclear propulsion.

Mr. Denzil Freeth: The Atomic Energy Authority collaborated fully with the Ministry of Transport Committee which assessed the suitability for marine propulsion of various reactors now in an advanced stage of development. Since the Committee reported, the Authority has begun a study of more advanced reactor systems.

Mr. Rankin: Is the hon. Gentleman aware that that Answer does not give

anyone a clear idea of what is being done? Would he say whether or not basic research by his Department on the attempt to get a suitable reactor system has now been abandoned, or is being abandoned altogether, despite the fact that savings in operating costs by the use of nuclear propulsion, compared with present costs, would be about 80 per cent.? Would not that present a serious future for shipping?

Mr. Freeth: I can assure the hon. Gentleman that the Atomic Energy Authority will continue to spend fairly large sums of money on the development of reactors which could have a sea-based application as opposed to a land-based application only.

Mr. Chetwynd: Was it upon the advice of the hon. Gentleman's Department that the Minister of Transport took the lamentable decision not to proceed at the moment with any of the designs that we have already?

Mr. Freeth: My right hon. Friend the Minister of Transport has not yet announced any decision to the House.

Meat (Research)

Sir L. Plummer: asked the Parliamentary Secretary for Science what are his proposals for encouraging meat research.

Mr. Denzil Freeth: The matter is still under consideration, but it is hoped to make a statement shortly.

Sir L. Plummer: Can the hon. Gentleman prevail on his noble Friend to see that "shortly" really means "shortly"? Is he aware that we have a mission buying French cattle in France, that we have the growth of baby beef under the broiler system in this country, and that we have competition from chickens? Surely something should be done to instruct housewives and farmers about exactly what is needed in the country's interests?

Mr. Freeth: I agree that it is desirable that the proposal to set up a meat research institute should have a final decision as soon as possible, but for some time a great deal of research on meat has been taking place at the Low Temperature Research Station at Cambridge, which I visited last Friday.

Imperial College (Low-Power Nuclear Reactor)

Mr. Wainwright: asked the Parliamentary Secretary for Science if he will now state when the London University Imperial College of Science and Technology will be allowed to commence building a low-power nuclear reactor.

Mr. Denzil Freeth: The discussions to which I referred in my reply to the hon. Member on 9th May are not yet concluded and I am not yet in a position to make a further statement.

Mr. Wainwright: Does not the hon. Gentleman think that this situation is rather deplorable? Are not we lagging further behind other countries in not having low-powered reactors at our universities? Will he do something to speed this matter up, so as to enable our undergraduates to study the building and use of a low-powered reactor?

Mr. Freeth: It is only within the last few days that London University has made its final views known to the Department of Scientific and Industrial Research, which is now awaiting the revised application for a grant, with full supporting details and up-to-date estimates of costs.

Biology (Research)

Mr. Wainwright: asked the Parliamentary Secretary for Science what are his proposals for improving biological research.

Mr. Skeffington: asked the Parliamentary Secretary for Science what are his proposals for implementing 'the recommendations contained in the Report of the Advisory Council on Scientific Policy, 1960, on taxonomy.

Mr. Denzil Freeth: At the request of the Advisory Council on Scientific Policy, a Committee of the Royal Society is considering existing arrangements for supporting fundamental research in biology, and I am awaiting the outcome of its consideration.

Mr. Wainwright: Are not the hon. Gentleman and his noble Friend delaying these matters instead of getting on with the job? The medical profession is doing excellent work in biological

therapy, but is having to neglect certain research because of lack of finance. Will the hon. Gentleman again believe in the old adage that prevention is better than cure?

Mr. Freeth: A very high standard of biological research is being carried on in a number of institutes and institutions, and it is not a bad thing to get a body of expert opinion such as the Royal Society to tell us where the gaps lie, if there are any.

Private Industry (Research)

Mr. Skeffington: asked the Parliamentary Secretary for Science if he will give the percentages of research, and cost of work, carried out by private industry working partly on Government contract.

Mr. Denzil Freeth: According to calculations published in last year's Report of the Advisory Council on Scientific Policy, private industry carried out research and development costing £266 million in 1958–59, of which £154 million or 58 per cent. was financed by Government.

Food (Research)

Mr. Kelley: asked the Parliamentary Secretary for Science if he will now announce Government proposals for encouraging food research.

Mr. Denzil Freeth: A considerable amount of research on food is at present being undertaken at the research stations under the control of the A.R.C. and D.S.I.R., by research associations under the auspices of the D.S.I.R., and elsewhere. The possibility of extending this work is kept under review.

Mr. Kelley: Does not the Parliamentary Secretary think, having regard to the large amount of work which he says is being done and, I presume, the enormous amount of money which is spent in this field, that it would be well to publish same findings of the organisations which are busy in this work?

Mr. Freeth: When they reach a stage at which publication would be useful, all the findings are published in the appropriate journals. The research associations do their best to see that the


firms which might benefit from the researches made are aware of what is being discovered.

Computer Techniques

Mr. D. Jones: asked the Parliamentary Secretary for Science if he is aware of the contribution the computer machine would make to the prosperity of British industry; and what research he is undertaking in order to secure the maximum benefits from an increase in the scale of its general use.

Mr. Denzil Freeth: Yes, Sir, I am fully aware of the variety and importance of the contributions which computer techniques can make to the prosperity of British industry. Government agencies are supporting a great deal of research and development in this field and encouraging its application. Support is also being given to the British Conference on Automation and Computation, one of whose aims is to extend the use of these techniques throughout industry.

Mr. Jones: I cannot say that these efforts are in any way successful, and I wish to add—[HON. MEMBERS: "Ask a question."] I am coming to my supplementary question. In the meantime, I hope that hon. Members who interrupt me appreciate the time that they are wasting. The point is that this makes a tremendous contribution—[HON. MEMBERS: "Ask a question."] I should like to ask the Minister, as a supplementary question, how many meetings he has had with British industry in order that the benefits of this machine may be made known, for the truth is—

Mr. Speaker: Order. Question Time is not the time for giving information, as I must remind the hon. Member.

Mr. Jones: Is the Minister aware that this machine is under-employed?

Mr. Freeth: The National Physical Laboratory, which is one of the stations of the D.S.I.R., provides an advisory service to industry and assists individual firms with programming problems and the application of computer techniques. In its research into the application of computers it has paid particular attention to a number of industries in which computer techniques, we believe, can be of benefit.

Nuclear Explosions (Detection)

Mr. Mason: asked the Parliamentary Secretary for Science to what extent the Atomic Energy Authority is concerning itself with the development of instruments and systems to detect nuclear explosions both underground and in space; what form these developments are taking; and what prospects there are of a fully effective detection system being devised.

Mr. Denzil Freeth: The Atomic Energy Authority is pursuing two main lines of approach: seismic studies for earth-based explosions, and studies of the ionic and optical changes in the upper atmosphere which would occur as a result of explosions in space. Progress towards a fully effective detection system would be faster if all three countries taking part in the Nuclear Tests Conference were pooling their efforts in a coordinated programme of research, as Her Majesty's Government and the United States Government have repeatedly urged.

Mr. Mason: Is the Minister aware that the Atomic Energy Authority seems to have stepped up its research in this field? Is this due to Government optimism in expecting a test agreement soon or is it that they suspect that Russia has tested underground or in space and that we have to speed up our efforts to try to detect these tests?

Mr. Freeth: Naturally, the Government still hope that it will still be possible to make progress in the Geneva talks, but research of this kind is equally essential if we are to have an adequate system of international inspection.

Oral Answers to Questions — QUESTIONS TO THE PRIME MINISTER

Mr. Speaker: The House will have observed that the Order Paper today indicates that the Prime Minister will answer his Questions at 3.15 p.m. The Prime Minister has informed me that he is at the service of the House in this matter and is willing to try this experiment for the remainder of the Session, if that be the wish of the House, as I understand it is.

Oral Answers to Questions — AMBASSADOR TO SOUTH AFRICA

Mr. Brockway: asked the Prime Minister to which Minister the United Kingdom Ambassador to the Republic of South Africa will be responsible.

The Prime Minister (Mr. Harold Macmillan): A decision will be made when the review of our relations with South Africa, now in progress, has been completed. Meanwhile the Ambassador will continue to be responsible to my right hon. Friend the Secretary of State for Commonwealth Relations.

Mr. Brockway: May I express our appreciation of this new arrangement for answering Questions and the hope that it will be convenient for the Prime Minister as well as useful to the House?
How long does the Prime Minister expect it will be before a decision is reached on this matter of South Africa? Is he aware that very many of us take the view that, since the Union of South Africa has withdrawn from the Commonwealth, the Ambassador should be representative of the Foreign Office and not of the Commonwealth Relations Department?

The Prime Minister: I am grateful to the hon. Member for what he said about the arrangement of Questions. I can assure him that this arrangement suits me much better because I know when to come here.
Answering the second part of the supplementary question, under the standstill agreement there will be a considerable period before we can negotiate all the many problems which arise. I think that we had better wait to see what progress we make under the standstill arrangements.

Oral Answers to Questions — CYPRUS (COMMON MARKET)

Mr. F. Noel-Baker: asked the Prime Minister which Minister will conduct discussions with the Government of the Republic of Cyprus regarding the effect on the Republic of an association between the United Kingdom and the European Common Market; and where and when these discussions will take place.

The Prime Minister: My right hon. Friend the Lord Privy Seal has visited

Nicosia for this purpose, and had talks with Cyprus Ministers.

Mr. Noel-Baker: Many of us are very grateful to the Prime Minister for the new arrangement of Questions. Can he add anything about the character of the talks and the outcome and whether they were satisfactory or unsatisfactory? Can he make any comment about them?

The Prime Minister: A communiqué has been issued summarising the discussions.

Oral Answers to Questions — PRIME MINISTER (SPEECH)

Mr. Donnelly: asked the Prime Minister whether he will arrange for the full text of his speech about national policies at Calne, Wiltshire, on Saturday, 1st July, to be placed in the Library.

The Prime Minister: It would be unusual to place in the Library a copy of a speech made on a party political occasion, but it would give the Conservative Central Office great pleasure to send the hon. Member a copy of the speech that I made at Calne on 1st July.

Mr. Donnelly: Is the Prime Minister aware that while parts of that speech are unexceptionable, there was a section which referred to the fact, which the Prime Minister claims, that this country had never been more prosperous in its history? Is he aware that there is a growing feeling in this country that he has consistently, reverting to his Answer just now, put party interests before those of the nation? At what time in this century has there been a Prime Minister who has been more gorged by his own words?

The Prime Minister: Answering the first part of the question, I think that the best thing would be to put the hon. Member on the permanent list of subscribers to Central Office publications. Answering the second part of the question, if he will search his heart, I will search mine. I remember no time when the people of this country have been better housed and better clothed and more fully employed.

Mr. Jeger: Has the Prime Minister's attention been drawn to the very fair


and objective examination of his policy in today's Daily Mirror?

The Prime Minister: Yes, Sir, but I do not serve Mr. King.

Oral Answers to Questions — COMMON MARKET

Mr. Warbey: asked the Prime Minister if he will make a statement on the outcome of the discussions with the Commonwealth countries on the possibility of Great Britain entering the Common Market, and on the steps which he now proposes to take.

Mr. A. Henderson: asked the Prime Minister whether he will make a further statement on the policy of Her Majesty's Government in relation to the Common Market following the visits of Cabinet Ministers to Commonwealth countries.

Mr. Doughty: asked the Prime Minister if he will make a statement on the views communicated to Her Majesty's Government by the other countries of the European Free Trade Association as to the desirability of Great Britain joining the European Common Market.

Mr. Biggs-Davison: asked the Prime Minister whether he will make a statement on the Ministerial consultations with Commonwealth Governments about relations with the European Economic Community.

Mr. Holt: asked the Prime Minister, following the recent statements of Commonwealth leaders on the question of Great Britain's entry into the European Economic Community, if he will announce forthwith Her Majesty's Government's decision to open formal negotiations with the European Economic Community.

Sir C. Osborne: asked the Prime Minister, in view of the fact that the French President has officially refused to consider any of the concessions, in relation to the Rome Treaty regarding the European Free Trade Association, agriculture and the Commonwealth, which are necessary in order to enable the United Kingdom to join the Common Market, whether he will discontinue consultations with Commonwealth Governments on this matter; and if he will make a statement.

Mr. Sorensen: asked the Prime Minister if he will make available to the House the evidence advanced to his Ministerial colleagues by Commonwealth Governments concerning the immediate and ultimate economic consequences to the Commonwealth countries if the United Kingdom joined the Common Market; what assurances were given to those Governments in respect of this; and whether any Commonwealth Government made any proposal for the substantial improvement of trade and commerce between its own country and the United Kingdom.

The Prime Minister: As I said in reply to a Question on 13th July, I hope to make a statement on these matters before the House rises. The House will understand that the Government must first hear the reports of the Ministers who visited the various Commonwealth countries, and discuss the whole question in the light of these reports.

Mr. Speaker: There was so much noise that I did not hear. Might I ask the Prime Minister whether he was answering more than one Question?

The Prime Minister: Mr. Speaker, I should have said that, with permission, I would answer Questions Nos. 6, 8, 9, 10, 11, and 13 with Question No. 4.

Mr. Warbey: Is it not already manifest that the Government's travelling salesmen have returned with virtually empty order books? Will the Prime Minister say how many of the dozen or so Commonwealth countries visited have shown positive enthusiasm for Britain's entry into the Common Market?

The Prime Minister: I think that the hon. Gentleman has given a quite false account of these very valuable discussions. If the hon. Gentleman's comments came from any other quarter I would pay more attention to them.

Mr. Doughty: Will the Prime Minister, when making his statement, deal in detail with the views of the individual Commonwealth nations, and not make a general statement? With regard to Question No. 8 which deals with the European Free Trade Association and not with the Commonwealth, will the Prime Minister remember that we owe a duty


to those countries who have gone in with us to see that they come along with us into the Common Market? If we do not succeed in the Common Market, we can form a stronger association with them and possibly with the Commonwealth as well.

The Prime Minister: On the first part of the supplementary question, perhaps my hon. and learned Friend will await my statement. With regard to the second part, we have all through been in the closest touch with the E.F.T.A. members, and indeed we had a meeting on this very subject only a few weeks ago.

Mr. Biggs-Davison: While agreeing with what my hon. and learned Friend the Member for Surrey, East (Mr. Doughty) said about E.F.T.A., may I ask the Prime Minister whether he will respond to the challenge so forcibly issued to this colleagues by the Commonwealth Governments and give new priority to the expansion of Commonwealth trade, with the aim of a Commonwealth freer trade asociation able to associate with Continental Europe, and will he therefore keep in mind Mr. Diefenbaker's call, echoed from Pakistan and elsewhere, for a Commonwealth Prime Minister' s conference?

The Prime Minister: These are all relevant questions. My hon. Friend will remember the offer that we made to Canada two or three years ago.

Mr. Grimond: Can the Prime Minister clear up one point? As the Common Market has been growing for some years, can the Prime Minister tell us when the Commonwealth was first consulted about our relations with it?

The Prime Minister: The hon. Gentleman will remember that the first effort we made was a long negotiation—which at one time looked hopeful—for the formation of a European Free Trade Area. That very nearly succeeded. I do not regret that negotiation. I think that it was well worth undertaking. It was only when it broke down that we had to consider the situation resulting.

Mr. M. Foot: Will the Prime Minister give a guarantee that there will be not merely a statement on this subject before the House rises for the Recess, but an opportunity for a full debate on it?

Would not it be wrong to have a statement on which only questions could be put to the right hon. Gentleman?

The Prime Minister: That is another matter.

Mr. A. Henderson: In view of the statement made this morning by the Secretary of State for Commonwealth Relations that there was a likelihood of a high-powered Commonwealth conference being held, may I ask the Prime Minister whether that has been considered by the Government?

The Prime Minister: I do not understand that the Secretary of State for Commonwealth Relations made any such statement.

Sir L. Ungoed-Thomas: Will the right hon. Gentleman admit what is obvious to everybody else, that the purpose of these visits to the Commonwealth was to sell the Common Market idea rather than to obtain the views of the Commonwealth? Will the Prime Minister do two things before he enters into any negotiations with the Common Market? First, will he have a meeting of the Commonwealth Prime Ministers so that they can all together, jointly, discuss the political as well as the economic implications of the Common Market? Secondly, will be enable this House to have a debate on the subject before he enters into any negotiations?

The Prime Minister: With regard to the first part of the supplementary question, the object of these visits was to consult and to explain, and I think that it would have been a great mistake not to have done that. I think that they have been very valuable. In the light of them I will make a statement, and in the light of that statement the House must decide what it wishes.

Sir L. Ungoed-Thomas: Will the right hon. Gentleman answer the last part of my supplementary question?

Mr. Gaitskell: Reverting to the question of a debate, as the Chancellor of the Exchequer is to make a very important statement next week, following which I imagine some opportunity for debate is bound to be provided, will the Prime Minister consider whether it would be


convenient to incorporate the statement on the Common Market with the statement on the Commonwealth visits?

The Prime Minister: It might be convenient to the Opposition, but I do not think that it would be at all a good thing to mix up two quite separate subjects.

Mr. Gaitskell: Does the Prime Minister really regard the subjects as totally separate? If he refuses to deal with the matter in the way I have suggested, will he give a guarantee that there will be an opportunity for the House to discuss this matter before we rise?

The Prime Minister: That is not a matter for me, but we will take into account the wishes of the House.

Mr. H. Wilson: asked the Prime Minister if he will now publish a White Paper setting out the main paints raised in discussions between Commonwealth Governments and the Ministers who visited them to discuss the problems which would be raised by British entry into the Common Market.

Mr. Doughty: asked the Prime Minister if, after the return of the Ministers now visiting Commonwealth countries, he will issue a White Paper giving the views expressed by those countries on the question as to whether Great Britain should join the European Common Market.

Mr. Emrys Hughes: asked the Prime Minister if he will publish the detailed observations of the Commonwealth Governments visited by the various representatives of Her Majesty's Government on the question of the Common Market.

The Prime Minister: I do not think that it would be right to publish a White Paper giving an account of private discussions between British Ministers and Commonwealth Ministers. I am, however, arranging for all agreed communiqués issued to be published together.

Mr. Wilson: Is the Prime Minister not aware that in addition to the agreed communiqués a great deal has been put out in the various Commonwealth countries in newspapers? Is the right hon. Gentleman not yet aware that this is a vital decision one way or the other for the whole country, for the whole nation,

and for the whole Commonwealth? Will he stop treating this as though it were a private thing to be decided at a country house party?

The Prime Minister: The second part of the supplementary is quite worthy of the right hon. Gentleman. With regard to the first part, whatever newspapers may say, I still hold the view—perhaps it is old-fashioned—that one should not put out statements about private discussions with Commonwealth Prime Ministers.

Mr. Doughty: Is the Prime Minister-aware that if he makes a statement to the House it will receive the same amount of publicity as the White Paper will receive?

Mr. Emrys Hughes: Is the Prime Minister aware that there has been considerable criticism in the Canadian Press and also in our Press that he has become entirely subservient to the strategic policy of Mr. Kennedy and the United States of America? Can the Prime Minister assure us that he has not succumbed to pressure from President Kennedy on the Common Market?

The Prime Minister: Whatever may be the hon. Gentleman's views about that, and of course he is well-informed, it is certainly not the view of the American Press.

Mr. P. Williams: Is my right hon. Friend aware that when the Conservative Party took office ten years ago 50 per cent. of our exports went to the Commonwealth, whereas today the figure is only 40 per cent.? This is an unfortunate situation, and it is not enough to cast away as an aside, as my right hon. Friend did a few minutes ago, a remark about an offer made to Canada a few, years ago. What is now needed is a Commonwealth Prime Ministers' conference to bring together Commonwealth trade interests and to promote them.

The Prime Minister: That is another issue, but I think that the broad picture which we have to take into account is that for the maximisation of world trade the growth of the wealth and strength of Britain is of Commonwealth interest.

Mr. Shinwell: In view of the criticism that comes from both sides of the House,


the criticism in sections of the Press, and criticism from Commonwealth countries and elsewhere, does not the Prime Minister think that he might display a little common sense and abandon the whole idea?

The Prime Minister: Perhaps the right hon. Gentleman, with his natural courtesy, will be good enough to await the statement that I propose to make.

Sir D. Walker-Smith: Will my right hon. Friend be good enough to see that one way or another the House is made aware not only of the reactions of the Commonwealth to the possibility of Britain joining the Common Market, but of their reactions to any proposals which Ministers may have put before them for the review and revision of the Ottawa Agreement and the Commonwealth trading arrangements so as to make them fully effective in the context and conditions of 1961?

The Prime Minister: Of course, that is relevant to this issue.

Mr. Speaker: Mr. Gourlay—Question No. 12.

Sir C. Osborne: Mr. Speaker, may I ask Question No. 11?

The Prime Minister: It has been answered.

Sir C. Osborne: I was not aware that it had been answered. Unfortunately I was not called to ask a supplementary question to the Answer to a lot of Questions, and that is why I thought that my Question had not been answered. May I ask this supplementary question—[HON.MEMBERS: "No."]

Mr. Speaker: Order: This is my fault. Might I ask the Prime Minister whether Question No. 11 was answered, and if so, with which Questions?

The Prime Minister: Mr. Speaker, it was answered with Questions Nos. 4, 6, 8, 9, 10 and 13.

Mr. Speaker: Then I apologise. The mistake is mine. I cannot save the matter for the Hon Member. I am afraid.

Sir C. Osborne: May I ask a supplementary question now?

Mr. Speaker: I am afraid not.

Oral Answers to Questions — GERMAN FORCES (UNITED KINGDOM)

Mr. Gourlay: asked the Prime Minister when he received the letter from Kirkcaldy Town Council opposing the training of German troops in this country and the possible use of Rosyth Dockyard for German submarines; and what was the nature of his reply.

The Prime Minister: I have sent the hon. Member a copy of the reply sent on my behalf to the letter to which he refers. I received the letter on 13th July.

Mr. Gourlay: Is the Prime Minister aware that the contents,of the letter mentioned in the Question express clearly the sentiments of the majority of Scottish people? Will he give an assurance that he will consult local authorities before any further facilities are granted to German troops?

The Prime Minister: I do not know about consulting local authorities. In my letter I tried to give a reply to the paint made to me, and I think that it was a fair and satisfactory one.

BUSINESS OF THE HOUSE

The Secretary of State for the Home Department (Mr. R. A. Butler): With permission, I should like to make a short statement on business.
Tomorrow, Wednesday, to allow adequate time for the debate on the Visiting Forces (Application of Law) Order, it would seem to suit the convenience of the House for it to be taken as second item of business after the Lords Amendments to the Rating and Valuation Bill.
The Exchequer Advances (Limit) Order will, therefore, be deferred. It might be convenient for this Order to be debated in the context of the statement which my right hon. and learned Friend the Chancellor of the Exchequer will make next week.
If the Visiting Forces (Application of Law) Order is concluded at a reasonable hour tomorrow, we shall seek to complete the Second Reading of the Suicide Bill [Lords], which was adjourned last Friday. The Bill will then go to a Standing Committee.
In regard to the business on Friday, of this week, as proceedings on the Bristol, South-East petition are still continuing, and it may well be that judgment will not be delivered this week, it is thought preferable to postpone consideration of the Motion to set up a Joint Select Committee on House of Lords Reform.
It is proposed, therefore, that the following business should be taken next Friday:
Consideration of Lords Amendments to the Covent Garden Market Bill, and to the Land Drainage Bill.
Afterwards, we propose to proceed with the Consideration of Motions to approve the Motor Vehicles (Variation of Speed Limit) Regulations, the Patents (Fees Amendment) Order, the Insurance Contracts (War Settlement) (Germany) Order, and five Cotton Industry Orders.

Mr. Gaitskell: Will the Leader of the House elucidate the Government's intentions and motives in deferring the debate on the Motion dealing with House of Lords reform? Was it always their intention that this debate should not be held until after the judgment had been delivered? If so, could not the right hon. Gentleman have foreseen that it was likely to take a little longer? Finally, if the judgment is delivered before the Summer Recess, is it the Government's intention to proceed to debate the Motion before then?

Mr. Butler: The right hon. Gentleman will remember that he made a special request that this business should not be taken on a Friday, and I undertook, across the Floor of the House, to pay

attention to what he said. Now that I have paid attention to what he said, perhaps he will express his gratification.
We had not anticipated that the petition would take so long in the hearing, and that the judgment would take so long in being delivered. We cannot be certain, but we are under the impression that it is taking longer than we had anticipated. It would be unwise—in fact, improper—that a debate should take place when opinions expressed in it might have their effect upon the judgment. I am advised that it would, therefore, be wiser to postpone the debate, and to take, instead, the business that I have stated.

Sir L. Ungoed-Thomas: I appreciate that the Government are in a stickier spot than they thought they would be, but will the Leader of the House say that this matter will be taken, not on a Friday, before the House rises?

Mr. Butler: I cannot give any undertaking, as we have very important business next week. It remains our intention that this matter should remain on the Order Paper and be taken at the best possible opportunity.

Mr. C. Pannell: Is the object of deferment a kind gesture on behalf of the Leader of the House to allow Mr. Benn to take part in the debate?

Mr. Butler: As usual, the hon. Member has raised a substantive point. We cannot tell what the judgment will be in this case. I think that it would be unwise to hold this debate if there is any doubt about the judgment not being delivered this week—and as there is, I think it much better not to have the debate.

BURIAL OF OFFENDERS

3.35 p.m.

Mr. Charles Pannell: I beg to move,
That leave be given to bring in a Bill to amend section six of the Capital Punishment Amendment Act. 1868.
I hope that it will not be thought presumptuous of me to seek leave to bring in this Bill at this stage, when we are about to debate the burial of the Government. [Interruption.]

Mr. Speaker: Order. In courtesy to the hon. Member who is asking leave of the House to bring the Bill, I hope that hon. Members will make less noise.

Mr. Pannell: Thank you, Mr. Speaker.
Section 6 of the Capital Punishment Within Prisons Act, 1868, says:
The Body of every Offender executed shall be buried within the Walls of the Prison within which Judgment of Death is executed on him; provided that if One of Her Majesty's Principal Secretaries of State is satisfied on the Representation of the Visiting Justices of a Prison that there is not convenient Space within the Walls thereof for the Burial of Offenders executed therein, he may, by Writing under his Hand appoint some other fit Place for that Purpose, and the same shall be used accordingly.
Putting the matter briefly, I wish to amend that provision to allow the Home Secretary, where he thinks fit, and under such conditions as he considers desirable, to give back the body to the next of kin, where that is desired. Although I am not directing my remarks at the recent discussion of the Evans case, in that debate the Home Secretary left the House with the impression that he could not give back the body of Timothy John Evans to the next of kin, on the basis that there was no Royal pardon. That difficulty would go if my Bill were passed.
There are substantial reasons why we should do this. I am having a good deal of trouble owing to the oratory of hon. Members opposite. There was a time when one of your predecessors, Sir, said that he could not hear me, Mr. Speaker. I am sure hon. Members opposite cannot, at the moment. We have now altered the form of sentence of death. The judge now no longer delivers the old form of sentence of death, which is a rather long one, in which he says:

I will content myself now with passing upon you the sentence of the law, which is, that you be taken hence to the gaol …; and that you be taken thence to a place of execution and be there hanged by the neck until you be dead; and that your body be afterwards buried within the precincts of the prison in which you shall be last confined after your conviction; and may the Lord have mercy upon your soul.
That rather ghoulish form of words has gone out, as the Royal Commission recommended it should, and judges now say:
You have been convicted of capital murder and by the law of this country the penalty is that you suffer death in the manner authorised by law.
In pronouncing sentence the judge now says nothing about a man's being buried within the confines of the prison. The 1868 Act was brought in to do away with public hanging, and when the House decided to do away with public hanging it thought that it would also do away with public burials.
The last public hanging in this country was the hanging of Barrett, the Fenian, in 1868. There was a demonstration by the Fenians at that time, and one can understand that. Reading through the old debates, it is curious to discover that people thought that both private execution and private burial, and certainly the ignominy of burial such as this, would be a great deterrent. Nobody would take that view today. We would look upon the burying of a body in quicklime within the precincts of a prison wall rather as something completely ghoulish and out of keeping with our time.
In many countries now such bodies are restored to the relatives when that is desired. I am not arguing that in this country it should be done in every case. I am asking that it be done only with the discretion of the Home Secretary and where the right hon Gentleman considers it convenient, and even under conditions which he could lay down. Obviously, one would not want a public exhibition of the body of a man who had been buried following his execution for murder.
My attention was called to this matter by Dr. Charles Brook, a medical historian well known to hon. Members on this side of the House. He is sure that there is something in the contention that


it is a contradiction when, having changed the form of the sentence of death to a more civilised form, we should not change this matter with it. I referred to the case of Evans. It would not be appropriate for me to dwell on that now, but in so far as the Home Secretary appeared to think that the law was an impediment for him to perform even a half-hearted act of justice, my proposed Bill may serve to underline that.
I cannot say that it is with pleasure that I move this Motion relating to this comparatively small matter, but I think that this is one of those things which is more in tone with the state of civilisation in our time. I have said before that the degree of civilisation in a country is not determined by what is done about big things, but about the smaller things of life which sometimes affect those people who are friendless, alone or cast out. I cannot believe that, having executed a man, we should necessarily render such great harm and hurt to his relatives.

Question put and agreed to.

Bill ordered to be brought in by Mr. C. Pannell, Miss Bacon, Sir Beverley Baxter, Mr. Dodds, Mr. Grimond, Mr. Cledwyn Hughes, Mr. Roy Jenkins, Mr. Mayhew, Dr. Barnett Stross, Mrs. Thatcher, Mr. Tiley, and Miss Joan Vickers.

BURIAL OF OFFENDERS

Bill to amend section six of the Capital Punishment Amendment Act, 1868, presented accordingly and read the First time: to be read a Second time upon Tuesday next and to be printed. [Bill 154.]

Orders of the Day — SUPPLY

[23RD ALLOTTED DAY]

Considered in Committee.

[Sir GORDON TOUCHE in the Chair]

Orders of the Day — CIVIL ESTIMATES AND ESTIMATES FOR REVENUE DEPARTMENTS, AND SUPPLEMENTARY ESTIMATE, 1961–62

Motion made, and Question proposed,
That a further sum, not exceeding £45, be granted to Her Majesty, towards defraying the charges for the year ending on the 31st day of March, 1962, for the following Services connected with the Economic Situation, namely:

Civil Estimates and Supplementary Estimate, 1961–62



£


Class I, Vote 3, Treasury and Subordinate Departments
10


Class VI, Vote I, Board of Trade
10


Class II, Vote 1, Foreign Service
10


Class II, Vote 2, Foreign Office Grants and Services (Revised Estimate)
10


Class II, Vote 2, Foreign Office Grants and Services (Supplementary Estimate)
5


Total
£45

ECONOMIC SITUATION

3.43 p.m.

Mr. Hugh Gaitskell: Next week we shall hear the proposals of the Chancellor of the Exchequer for dealing with the economic crisis. Today, we propose to examine the reasons for the crisis, 'both the short-term and the long-term one. The immediate reason is in no doubt. As in all such crises it is the run on sterling which has developed. Too much sterling is being offered in relation to the amount being purchased, and consequently, in the three months, April, May and June, there has been a loss of approximately £160 million from our gold reserves. This would have been very much higher but for the support of the European central banks. We do not know exactly how much sterling they have acquired in the last three months, but it is noticeable that in April alone, the first of those three months in which there was a decline in the gold reserves, the holdings of Western Europe in sterling balances rose by £85 million.
Why is there a run on the £? Part of the answer, of course, is that our current balance of payments is in deficit. In the first quarter we were "in the red" to the extent of £56 million. We may be somewhat less "in the red" in the second quarter, but that there was also a deficit seems highly probable. This is not a very large figure. It would not matter so very much if it were something to be taken on its own. But it cannot be considered on its own, for it follows a long and substantial deterioration in our balance of payments.
In 1958, we had a substantial surplus of £291 million. This fell in the following year to £51 million and it developed into a deficit, on a massive scale, of £344 million in 1960. But there is more to it than these figures suggest, for normally we invest abroad substantial sums on long-term—on the average, say, about £200 million a year. We have to do this so long as we are providing capital for the Commonwealth and for other countries. So that, in any event, we need a surplus on our balance of payments of that amount in order to finance the overseas investment. If we have no surplus at all, we have to borrow not only to cover the deficit, but also to cover the long-term investment. Last year, we must have borrowed on short-term something like £600 million to cover both the deficit and the overseas investment which took place. It was not difficult that year because there happened to be a flight from the dollar. Indeed, we borrowed more than £600 million, because our gold reserves actually rose during the year.
We go on trying to maintain a world banking business on totally inadequate reserves. In such conditions I think that most bankers would say that it would be wise to reduce short-term liabilities and to increase short-term assets. In fact, we have done nothing of the kind. During the last six years, according to Mr. Barna, in his article in the Financial Times Revew, we have lent abroad on long-term about £1,000 million and borrowed short almost exactly the same amount. I can hardly feel that this is a very sensible way of conducting a banking business.
Even this increased vulnerability—it is increased vulnerability—would not perhaps be so serious if the prospect ahead of us were more favourable. But

it is not. We must expect another balance of payments deficit on current account in 1961. It will not, I think, be as large as last year, but it will probably be about £150 million. This means that if we continue to lend abroad our normal £200 million, we shall once again, if we can get it, have to borrow another £350 million, or lose at least the equivalent from our gold reserves.
Finally, and most important of all, there is now conclusive evidence—which even the Government cannot ignore—that in comparison with other industrial nations we are doing exceedingly badly in the rate of expansion of our production and our exports. Continued failure in this field makes it impossible for us as a nation to enjoy the higher living standards which others have, and which we expect, and to pay our way at the same time. It is the widespread conviction that we are failing to compete in, productivity, design, salesmanship and, price, either at home with imported products or abroad with other countries' exports, which leads, and has led, and is leading, to a profound lack of confidence in the future of sterling; and, therefore, it is this which is the underlying cause of the crisis today.
The facts and figures have often been given. They should be blazoned in the country in place of those other posters which so conveniently lulled the British people into a false confidence and complacency.
These are the facts. Our exports in 1959 and 1960 rose by only half as much as our imports. Last year; France, Germany, Italy, Belgium, Sweden, Japan and the United States all increased their exports more than twice as fast as ours.
Between 1951 and 1960, we had the smallest increase in exports of any industrial nation; and if anybody says; "Ah, but there were other nations which had not recovered so far by 1951, and you should take a later date," I will do so. I will take the progress since 1955, and, again, the same story is true. We had the smallest increase in exports between 1955 and 1960 of any industrial nation. The United States increased her exports half as much again as ours. France, Holland and Sweden all increased their exports three times as fast as ours. Western Germany increased her exports five times as fast


as ours, Japan six times and Italy eight times. These are the facts of our record between 1955 and 1960.
Our share in world markets of manufactures has fallen from 25½ per cent. in 1950 to 20 per cent. in 1955 and to 16 per cent. in 1960. Nor is this decline confined to European or non-Commonwealth markets. It is not a matter of the sterling area markets having expanded less rapidly than others. It is a matter of our having lost in the fight for sterling area markets, for there, in the last six years, our share has fallen by over a quarter. In Australia, Malaya, New Zealand, Pakistan, Ghana and Rhodesia—in evey single country—the share of our exports is falling.
Our invisible exports have dwindled from £400 million a few years ago to practically nothing today. Part of this, of course, is due to the failure of our shipping industry to achieve any net earnings at all. Part of it is due to the higher interest rates which we pay on the money we borrow, and it is estimated that this alone has cost us £50 million. Part of it must be due to the amount we pay out in dividends on foreign investment abroad. Here perhaps the Chancellor of the Exchequer or the President of the Board of Trade can tell us why it is that, despite the fact that we have invested so much abroad—£1,000 million in six years—we seem to get very little back from it. Can it have something to do with that change in tax law made by the present Minister of Aviation, when he positively encouraged business firms with subsidaries abroad not to remit dividends home? That is the story of our trading activity in these last few years.
It might be supposed that our problem of selling abroad had been made difficult—indeed, that the whole difficulty had been created—because we were trying to expand too fast at home. We are all familiar with the theoretical argument that if we expand too fast at home, imports go up, exports go down, we get into a balance of payments crisis and we must then clamp down. But this theoretical picture is also not borne out by the facts. Our record of growth in this country, as compared with others, is just as bad as our record of exports. Again, the figures speak for themselves. I take the period from 1955 to 1960

again, because it might be said that an earlier period would not be a fair comparison. During this period, in Germany, France and Italy, production has risen three or four times as fast as it has in this country. It has risen twice as fast in Holland, and nine times as fast in Japan.
It might also have been supposed that, since we neither had an expansion in exports nor an expansion in production, we might have had stable prices in Britain, or at least, prices that rose less rapidly than those in other countries where production was rising faster, but, again, the exact opposite is the truth. Only one country—France—has a record of more rapidly rising prices in the last nine years than Britain.
The Chancellor of the Exchequer said on Saturday:
The paramount need is that, as a country, we should face the facts.
I agree. And these are the facts, unpalatable as they may be. There is a run on the £. Our gold reserves are falling. For eighteen months, at least, our balance of payments has been in the red. We have been spending more than we are earning. We have the worst export record in the past ten years, or the past five years, of any industrial country in the world. We have a steadily declining share of world trade. We have almost the worst production record, and we have almost the highest rise in prices. These facts make some past statements look a little odd.
I have another quotation:
The result of all these measures taken together is that today the British economy is sounder than at any time since the First World War. Sterling has been established as a strong and respected currency. Our balance of payments is strong.
The Prime Minister said that in September, 1959, when our balance of payments was already declining fast and we were moving over into deficit. But he said something much more recently than that. Only at the beginning of this year he was still blandly cheerful.
Production should start moving again soon. Broadly speaking, you know, we are still in a big boom. … We have got it good; let's keep it good.
It also makes some posters look a little sailed, and I cannot help wondering what the new instructions to Messrs. Colman Prentis and Varley are to be.


Perhaps they will be told to introduce a new slogan, "For service and sacrifice, vote Conservative", and combine it with a picture of the Home Secretary disdaining port and over-ripe pheasant, and, at the same time, saying,
Good may yet come from our economic difficulties, especially if our party gives a lead to the country in asking for moral values to emerge instead of materialistic appetites.

Mr. W. A. Wilkins: It has destroyed all the moral values, anyway.

Mr. Gaitskell: I turn to remedies and fundamental causes. We shall hear the Chancellor's proposals next week. I suppose that there will be presented to us the dreary collection of expedients or, as the financial correspondent of the Guardian called them this morning, the "familiar stage properties"—a rise in Bank rate, an intensified credit squeeze, cuts in investment, particularly in public investment, a closer scrutiny of Government expenditure, the restoration of hire purchase restrictions.
These are the familiar short-run remedies introduced to save the £. Some of them may be inevitable in the circumstances in which we find ourselves today, but, let us also be clear, they have not—either singly or collectively—given us in the last ten years whenever they have been introduced, either growth or competitive power. They have given us, on the contrary, the record which I described to the Committee just now, a record which includes long periods of stagnation, a brief burst of expansion conveniently timed to fit in with General Election's, a crisis which comes fairly soon afterwards, then the cuts and then a long period of stagnation again, which leaves us where we are today.
This policy, in so far as it has not been simply determined by political considerations, is based on a theory that the Government do not need to take any positive initiative in the economic field. All they have to do, runs the theory, is to remove specific controls, to leave private enterprise to itself, bolstering it up, of course, every now and then with specific loans, and even grants, but otherwise letting it get on with the job.
In so far as any general controls have to be used these are to be principally of a monetary character and they are to operate over the economy as a whole.

The doctrine, I suppose, was most clearly put by the present Minister of Aviation. He made no bones about it. The whole object was to put the soundness of sterling first on the assumption that if we had a sound currency we would get growth, stable prices and a favourable balance of payments. We have none of these things today and we have Dot sound currency, either.
What is even worse, is that all this is known. Precisely because these remedies have been tried so frequently and failed to prevent another crisis, fewer and fewer people believe in them today. Fewer and fewer people include foreigners, who are looking and wondering what is to happen here and whether or not they would be wise to hold sterling at present.
The Government may, perhaps, make same reference to wage restraint. Certainly, the Chancellor in his speeches in the last week or two, has mentioned it. Is it to be resuscitated? Does he really expect that he will get any response from the trade unions after his record as Chancellor of the Exchequer? Did it occur to him, and to the Government, when they decided to increase the Health Service contribution and the Health Service charges, when he decided—presumably with their support—to concentrate tax reliefs entirely on Surtax payers, that there might be same difficulty a little way ahead and that perhaps, in those circumstances, he might find it rather harder to get the co-operation of the trade unions and the workers? I do not know, but it seems that either he must be convicted of the most appalling lack of foresight, or he imagined that human beings are very different from what they really are.
After all, wage restraint means, by and large, accepting the distribution of income as it is. It means that one does not make changes, that one does not go out to get more for oneself or for one's group. Therefore, if there is to be any chance of succeeding in persuading people to follow policies of this kind you must at least convince them that if the present distribution of income is not fair, you are doing your best to make it so. You cannot get their co-operation if, on the contrary, both by what you do and by what you refrain from doing you are making it more unequal.
The Financial Secretary to the Treasury, answering a Question the other day, gave these figures:
Between 1958 and 1959 total wages are estimated to have risen by 3½ per cent, total salaries by nearly 7 per cent. and ordinary dividend payments before deduction of tax by 12½ per cent. Between 1959 and 1960 wages and salaries together … are estimated to have risen by 7½ per cent, and gross ordinary dividend payments by 24½ per cent."—[OFFICIAL REPORT, 27th June, 1961; Vol. 643, c. 186.]
If we turn from the comparison of dividends and wage increases to the effect of Conservative policy on taxation it is the same story. If we take the effects of the period since 1956 of a series of different Budgets and combine both the Income Tax changes and the changes in insurance contributions, assuming that we are dealing with people who have contracted out so that they are not paying the higher graduated contributions, this is what emerges.
Below the level of £1,250 a year the actual effect on people's incomes is to worsen them. A married couple with two children on £600 a year lose nearly £13 a year. The £1,000 a year man loses nearly £5 a year. Then the improvement begins. It goes up slowly until we get to £3,000 a year—well over the Surtax level—when the net gain is £257 when we reach the £20,000 a year level the not gain is £3,000 a year. That is the way in which Conservative policies have quite deliberately made the distribution of income more unequal.
It has been suggested in some newspapers that the Chancellor is to freeze wages and salaries in the public sector. I hope that he will do nothing of the kind. In my view, such a policy would be both unfair and foolish. It would be unfair because it is precisely these wages and salaries which lag continuously behind others. It would be foolish because at least in some notable cases there is an acute shortage of personnel in these public services. If, for instance, it were determined to freeze teachers' salaries at a moment when we can all agree on the desperate need for more teachers in order to get the educational expansion going—which itself is a very necessary condition of our economic expansion—this surely would be the height of folly.
The third point is that we in this country should be able quite easily to

afford the kind of wage increases we have had in recent years. We have had a rise in money wages which is broadly the same as it has been in Western Germany, but there is one big difference. Prices have not gone up nearly so much, because there, of course, there has been a greater rise in productivity. Admittedly, if we get no rise in productivity and a rise in wages we are heading for trouble. That is bound to be the case.

Sir William Robson Brown: That is the whole problem.

Mr. Gaitskell: That is the whole problem, but the question is whether the Government are to concentrate on trying to hold wages down, or to do something to increase productivity.
I turn to the long-term position. The Chancellor has rightly said—here I agree with him—that this is essentially a long-term rather than a short-term problem. But there are two different attitudes which one can adopt towards long-term policy. There are those who say—and there has been reference to this in the newspapers recently—that what is really needed for the long term is to create a permanently higher level of unemployment, to get away from the full employment which we have had to something less than that, on the assumption and in the belief that, starting as it were from this lower level, we will then be able to obtain a steady expansion.
I very much hope that the Chancellor will not follow that advice, because there is no evidence that it would, in fact, produce that result. It remains a fact, if it be an unfortunate fact, that the fall in production which is called for by such a policy itself causes costs to rise, and must do so. There is no reason to believe that when we have got down to that level we will have the necessary expansion, or will provide British industry with the necessary incentive to expand.
If we reject, as I hope we shall, those negative remedies, and all of them are based on the idea that there is nothing positive that the Government can or should do, we have to turn to the positive possibilities, the actions which the Government could take. I hope very much that next week the Chancellor of the Exchequer will concentrate upon these. This afternoon I shall mention four things which I believe should be done.
The word "planning" for some years has been a dirty word in Conservative circles, something associated with the Labour Government and something connected in people's minds with austerity and controls. It is high time that the word was rehabilitated, and not only the word.
Perhaps it will be easier for the Government to do this now, because the Federation of British Industries is asking for planning. Perhaps it will be easier for them to do it because, if they look across the Channel, they will see an example of planning in France which, so far as one can see from the experience—and over here recently there was an interesting conference about it which was attended by business people and economists—has been of great importance in the drive for expansion which has been so successful in France.
What the French do, and what I am thinking of, is not laying down to each industry what it should do. What I am thinking of is the way the French do it. In effect, it is a co-operative effort, a planning commission with a staff of highly qualified experts, working out with the various major industries of France what their rate of expansion should be—

Sir Cyril Osborne: What about agriculture?

Mr. Gaitskell: —co-ordinating the plans for the different industries concerned and indicating to them what they should do.

Sir C. Osborne: Sir C. Osborne rose—

Mr. Gaitskell: The hon. Member knows that I mean him no discourtesy when I do not give way, but I still have a great deal to say and I hope that he will allow me to continue my speech.
The reason why this has worked in France—and this is certainly the evidence given by the French themselves—is that it has given French industry a purpose and direction which it otherwise would not have had, and which is now badly called for here.
The second thing which should be done is to adopt a much more positive attitude towards individual industries. We have one or two very striking examples of things which should have

been done and which have not been done. Last week, we had a debate on the shipbuilding industry and the gloomy story of the Minister of Transport shocked the whole country. But it was not a new thing. It is at least two years and perhaps more since a report on the shipbuilding industry was produced. It was hushed up by the Government in case it caused trouble. We have the same thing with the machine tool industry. When it is believed that an industry is clearly not doing its job properly, certainly let us have reports by the D.S.I.R., or whatever other expert body is most appropriate, but let us have them published so that the whole country can understand.
Another matter which should have been looked into long ago—and perhaps the President of the Board of Trade can tell us about it—is why we have had such a sharp rise in imports over the last years. It is not due, as the right hon. Gentleman knows very well, to an increase in imports of basic materials, or even food. It is principally an increase in manufactured goods. If one studies which these are, some remarkable facts emerge. I will not weary the House with this, because I am sure that the President of the Board of Trade knows of the article in the National Institute Economic Review for May, but there is one instance which I will mention.
Taking the cotton textile industry, both yarns and fabrics, and taking with that grey cloth and man-made fibres and clothing; if you add those items together, both on the export and import sides, it is a distressing and I would say astonishing figure that between 1957 and 1960 the balance of payments in these commodities alone—broadly speaking, the textile industry, including clothing, but leaving out wool, where there has been no big change—has deteriorated against us to the tune of no less than £130 million.
That is an extraordinary figure. It shows that a great deal of imported clothing is pouring into this country. I am not criticising the Government for allowing that to happen. It would be possible to argue that they should not have liberalised so soon, and so on, but the distressing thing is that somehow or other our own textile and clothing manufacturers do not appear to be able to produce the kind of articles which


our people want to buy, and that, consequently, they buy Italian and French and American clothes.

Sir C. Osborne: At the right price.

Mr. Gaitskell: No doubt price is important, but I would say that design is equally important and, for women's clothing, far more important.
The third thing the Government must do is substantially to increase the degree of professionalism in business and in exporting. I feel that too many of our exporters treat the whole thing as an amateur's job. Comparing their record and their attitude with that of the Germans or even the Americans, we find that the Germans and Americans have a far higher degree of training. When all is said and done, we train engineers and we train miners and we train craftsmen of all kinds and we train doctors and we train lawyers. Is it not about time that we began to take rather more seriously the urgent need for more regular training for management and for selling? Is it not about time that the Government considered why we have never had anything comparable with the Harvard School of Business, for instance? That is a matter in which action by the Government is urgently needed.
The fourth thing that the Government must do is to abandon what I call the "sealed lips" policy. This is not only a matter of hushing up reports that should have been published and, therefore, of deliberately stimulating interest—and, if hon. Members like, controversy—about what has gone wrong but a question of a different attitude altogether in the Government's relationship with the public and with the House of Commons.
For a long time, the Prime Minister, in particular, has made it a virtue to evade Parliamentary Questions when giving his Answers. He positively prides himself upon his success in refusing to give the House information. He thinks that the clever answer which evokes the regular cheer from those behind him is a substitute for statesmanship. Well, it is not. This kind of thing has to stop, and a totally different attitude has to be adopted.
Incidentally, is it not rather surprising that the Prime Minister has made only one speech in the House of Commons

since 1st November last, and that on South Africa? I should be surprised, indeed, if any Prime Minister in recent history had refrained from addressing the House of Commons for such a long time.
Finally, what has to be done—and this is the hardest thing of all—is to create a change in the whole climate of opinion in this country. A great attack has to be made on the soggy complacency of some managements, and the appalling indifference of some workers. People should feel it wrong, as they do not, that, for instance, it is not here but in Italy that motor scooters are developed; that it is Japan, not Britain, that developed transistor radios; that the better clothes are produced in France and Italy, and not here—

Sir C. Osborne: That is not true.

Mr. Gaitskell: Well, all I can say is that the women of this country appear to think so, judging by the import figures—that it is in America, and not here, that the big developments in jet aircraft have taken place.
People should feel ashamed when export orders are lost through bad delivery or high cost—

Mr. Gerald Nabarro: Or by unofficial strikes.

Mr. Gaitskell: Yes, or by unofficial strikes, but this is all part of the whole climate of opinion that hon. Members opposite have created.
The first thing that has to be done is to drop the positive encouragements to complacency which Conservative speakers and Conservative propaganda have laid on so thick. Incidentally, we had better also discourage "Operation Britain" from putting up posters such as the one it had a year or two ago bearing the phrase, "British Shipbuilding Leads The World." It looks a little sad today.
Something else is needed if we are to have co-operation between different people, between workers and management, between different sections, instead of their striving against one another all the time. There has to be, deep down, a feeling of fairness; a feeling that such differences in living standards as exist are justified and, plainly, they are not justified at present.
This is not a matter of austerity; there is no need for any of us to become killjoys. It is not high living standards, or better conditions or more leisure that are wrong. It is that these things are wrong when they are not earned—and they are not all earned today. The most obvious example of these things not being earned today is provided by those who obtain them from capital gains. Despite the fall in Stock Exchange prices in the last few weeks, it is still true that a man who invested £10,000 in 1951 would find his investment worth about £22,000 today—

Mr. Nabarro: Not if he had put the money into "Daltons".

Mr. Gaitskell: That is on the basis of the average level of equity prices. I am talking about investment in equities—and I do not suppose that the hon. Member for Kidderminster (Mr. Nabarro) ever invested in "Daltons"—

Mr. Nabarro: No, I did not.

Mr. Gaitskell: I would not expect him to. But the hon. Gentleman, when he explained to the House recently, and boasted so proudly of the way in which he persuaded the tax inspector to allow for tax purposes his subscription to the Carlton Club, was not only throwing some vivid light on his own personality and, perhaps, on that of other hon. Members opposite, but was showing us an example of exactly what is wrong with society today—

Mr. Nabarro: I am grateful to the Leader of the Opposition for giving way. Evidently, he has not read the OFFICIAL REPORT. Did he not observe the words that followed, addressed to his hon. Friend the Member for Sowerby (Mr. Houghton), during an intervention by me in his speech, that it is grossly unfair that I am allowed to do that, whereas a trade union member cannot charge his union subscriptions against his tax? I used that as a lurid example—[HON. MEMBER.S: "Oh."]—of the deficiencies in the present taxation system, and called on the Chancellor far reform.

Mr. Gaitskell: It is one of a number of things which, to quote the hon. Member's words, are "grossly unfair" today. I appreciate the hon. Member's help to us in this matter, but if he will take my advice he will not set himself up as a moralist.
How can we expect ordinary people, who are not in a position to make these large capital gains, to be satisfied? How can they be satisfied that higher living standards must be earned when, in many cases, so patently they are not? How can they be satisfied when expense accounts are still so lavish? How can they be satisfied when with every day that goes by comes an example of a new "killing" made by a land speculator in this or that town?
I give the Chancellor of the Exchequer one or two suggestions. If he wants to create a different climate, if he wants to make people feel that things are to be fairer in future, he might start by announcing next week that a capital gains tax will be introduced in due course, with retrospective effect from today. He could also proceed to announce, as I suggested earlier he should do, that he will not proceed any further with—indeed, that he will introduce legislation to cancel—the Surtax concessions provided in the Finance Bill. If he wants a little help from another colleague, he could ask the Minister of Housing and Local Government, in the speech he is to make on Thursday of this week, at least to indicate that he means to stop the land value scandal.
We have reached a critical moment in the nation's affairs. It is, of course, possible to go on as we have been doing with the stop-go-stop procedure we have had; with the continual conflict between the living standards that we would like to have and the living standards that we can earn; with a devaluation every decade or so as we fail to resolve this conflict. It would still probably be true, if that were the course we followed, that the Prime Minister would be able again to say to everyone, "You never had it so good". He would still—

The Prime Minister (Mr. Harold Macmillan): I did not devalue the £.

Mr. Gaitskell: The right hon. Gentleman devalued something else—he devalued our moral standards.
If we follow that sort of policy our influence will decline. We shall become a backwater—an historical relic. People will look on us as sunk in complacency, dreaming of the past. We shall be despised, perhaps in an affectionate way, by other countries.
Or we can accept the challenge of what has been up to now our failure and we can modernise ourselves and our institutions. But that will require a totally different attitude on the part of the Government and, a totally different set of measures which alone will evoke a totally different response from our people. In view of all that has happened, in view of the direct responsibility of the Government for our plight, in view of the way in which they have persistently mislead the people and clung to their doctrinaire policies when it was plain to all where they were leading us, we can have no confidence that they can provide the leadership which Britain now so desperately needs.

4.31 p.m.

The President of the Board of Trade (Mr. Reginald Maudling): The Opposition chose to have an economic debate today in advance of my right hon. and learned Friend the Chancellor of the Exchequer's statement next week. In those circumstances, I cannot anticipate, any more than could the right hon. Gentleman the Leader of the Opposition what my right hon. and learned Friend's statement will contain.
The Leader of the Opposition, apart from a certain number of political "cracks", which I will not answer, divided his speech between an analysis of the situation and the difficulties and a number of suggestions to deal with these difficulties. I will, if I may, follow the right hon. Gentleman in both halves of his speech.
The right hon. Gentleman was certainly right in saying that it is pressure on sterling that creates the urgency of our present difficulties. I agree that he was also right in saying that sterling, as a currency, is uniquely exposed to world conditions. Being an international reserve and exchange currency and being the central currency of the sterling area it must, at all times, carry an immense weight, but since the war the ratio between reserves and short-term liabilities has been different in character. The right hon. Gentleman talked about carrying on a world banking business on totally inadequate reserves.
Our reserves are not as inadequate as that, especially when you add the increased facilities available from the

International Monetary Fund. We must not give the impression that we cannot meet our commitments and position as world bankers. We have taken these monies on deposit and we owe them to our depositors. This is a handicap that is hanging about this country and will hang about this country for some time to come, whatever Government may be in power. Fundamentally, the strength of sterling depends on the United Kingdom economy, on our balance of payments, on our internal price level, and, I agree, now more in modern conditions, on the likely level of growth in our economy compared with other countries.
The present situation is that we have many international uncertainties which are bringing their normal consequences in the pressure on sterling at a time when our balance of payments position is weak, when we have a rise in prices internally and at a time when our capacity to grow as fast as our competitors is in doubt in many quarters.
I will, first, look at the balance of payments position. I think that the right hon. Gentleman was right in his estimates. Last year, we had a deficit on current account of about £340 million and I agree with the right hon. Gentleman that since then the current deficit has been about halved. But we have an annual capital outflow of about £200 million, and to cover that and the deficit we need about £350 million a year, in broad terms, on current balance.
I suggest that that figure should be compared, first, with our trade and reserve figures, and, secondly, with our gross national product, because £350 million a year, in terms of trade and exports or in terms of the size of the reserves, is a formidable figure. But in terms of the gross national product, which is over £20,000 million, it is marginal. It is, therefore, a great task and a difficult one to ensure adequate redistribution of our resources to meet this need for an improvement in our balance of payments—a great and difficult task in relation to our trade—but entirely within our capacity in relation to our industrial output and our industrial resources.
One of the great changes to which the right hon. Gentleman referred, in passing, has been the decline in the


position of our invisible exports. This is of great significance. For decades now we have relied on our invisible exports for our surplus. It is a long time since we could rely on a visible trade surplus. Over the last two years our invisible surplus has declined from over £200 million to virtually nil. This is a very big change of the utmost significance for our balance of payments.
Analysing that decline of about £200 million, £65 million was on Government account and £140 million on other account. Of that figure of £65 million, military expenditure, no doubt, accounts for a very large part, possibly the largest. There is also still a very big increase in Government expenditure overseas on and to the developing countries. I think that the Committee as a whole would wish us to do all we could to maintain that outflow of money.
We have, in this connection, done magnificently recently. During the last four years Government aid to the developing countries has doubled. We do not begrudge one penny of this expenditure but, of course, there must be a limit to an expansion of that liability and we must insist, naturally, that other countries should bear their proper share of this burden.
Another reason for the deterioration in the invisible account is the shipping account, about £50 million, and the interest and dividends account, about £80 million. The shipping item is very disturbing. It would not be appropriate for me now to go into detail, because this matter was discussed the other day. The decline is from a net earning position of substantial significance in our shipping account to a time when we are losing money on it. This is a big change. There are factors, some of them outside our control, yet some of them within our control, which affect this position.
The change in interest of about £80 million mainly arises from the fall in our earnings from oil. It is important that we should always realise how significantly our balance of payments position is affected by the earnings of our oil industry, which makes a tremendous contribution to our invisible balance. They have fallen substantially, these earnings, because of the world oil supply position. They were exception-

ally high in 1958, and, to some extent, they masked the decline in other items of interest and dividends.
The right hon. Gentleman asked some questions and I agree with much of what he said on this subject. I agree with what he said about the additional cost of higher interest rates in this country. I think that people investing in this country—investing in developed manufacturing industries—normally expect to get a quicker and more substantial return than we get from our outgoing investment often in developing countries, where profitability is lower and slower and where more of the profit in those countries must be ploughed back to develop the industries. This is the underlying reason for the shift, but I agree that it is a serious matter that deserves close attention.
That is the change in our investment position and I do not think, realistically speaking, that we can expect a marked and early improvement in the position of invisibles. However, there are some ways in which we can improve the position and, indeed, should improve it. But even if that be so, it still means that the burden on our visible exports is greater than it has ever been. No longer can we rely on invisibles. We must rely on visibles to earn us a current surplus.
I will look, first, at imports and, secondly, at exports, and, in doing so, answer some of the questions that the right hon. Gentleman asked. A strongly rising trend in imports is only to be expected. In 1960, the position was quite exceptional. The rate of stock building in 1960, at £560 million, was £400 million more than it was in 1958. The effect of that on our balance of payments in 1960 was serious. That exceptional rate of stock building will not continue and part of the improvement in the current balance of payments figures arises from the quietening down of the stock building programme.
I think that all experience shows that with rising consumption and a growing cross trade between countries in specialities such as machine tools, we must expect a growing import bill in this country. Although our import bill has grown fast, nevertheless the import bill of the continental countries has grown faster than ours, and, judging by their experience,


we must expect to go on importing more as the years go by.
What is the analysis of the situation? The right hon. Gentleman referred to consumer goods and finished manufactures. The figures are that between 1958 and 1960 the increase in the import bill was £811 million. Of this, industrial materials were £485 million, much the biggest item, and finished manufactures were £224 million. But of those finished manufactures, two-thirds were capital equipment for British industry, badly needed and much desired. If we were not importing those tools for the expansion of British industry we should have had to divert some of our own tools from the export market.
Therefore, it is necessary, when looking at the figures of finished manufactures, to distinguish between tools and equipment for greater efficiency, and consumer goods, which represent only a third of British manufactured imports and only 10 per cent. of the total increase in our increased import bill in the last two years. It would be very unwise of us to try to cut back on imports of consumer goods. We, who sell fine china, leather goods, glassware, motor cars, hardware, whisky and many other consumer goods, must be prepared to buy other people's consumer goods. I am sure that quotas and import restrictions are wrong.
The right hon. Gentleman is right in saying that the way to deal with this situation is to make our own consumer industries more competitive. But I would suggest that he underestimates the performance of our clothing industries. He should not generalise in this way. Some of the products of the British clothing industry are magnificent. I recently saw at the Moscow Fair some outstanding examples of quality and cheapness among British garments. Equally, throughout the industry as a whole, a good deal more exporting could be done, and I should like to see more competition from imported clothes forcing manufacturers who are not yet efficient enough to increase their efficiency. That is the way to improve the situation, and not by imposing controls.

Mr. Gaitskell: These figures are quite astonishing. The clothing exports fell from £34 million in 1957—this is at an

annual rate—to £30 million in 1961. Imports between the two periods were £18 million in 1957 and £40 million in 1961. This is a staggering increase and suggests that something ought to be looked at.

Mr. Maudling: It is a big increase in relative terms, but it is not a big increase in absolute terms when one looks at it against the background of a total increase in the import bill of £800 million The increase in imports of garments from America will, I hope, have a good effect in stimulating our industry to make itself more competitive. In that. I am at one with the right hon. Gentleman. The point that I was making is that we cannot find an easy solution to our balance of payments problems by imposing quotas and restrictions on imports, because, by and large, 90 per cent. of what we import is industrial materials, fuel, food, machinery and equipment for industry.
Now I must turn to our export prospects, because it is in the further expansion of our export trade that we must look for the greatest hope of solving our present difficulties.

Mr. Frederick Lee: Can the right hon. Gentleman explain why we are unable to expand our own machine-tool industry, thus obviating the need for this vast increase of machine-tool imports? We are a great engineering nation.

Mr. Maudling: We are expanding very fast. There is a growing cross-trade in machine tools. But one of the best places to sell machine tools is where they are made. Some of our best customers are America, Germany, Poland and Japan. No one nowadays can carry the whole range. This is a very healthy development. Our industry is doing very well indeed.
I am sorry that the right hon. Gentleman talked about my having suppressed the report of the machine tool industry. I did not do so. We had that excellent report of the committee by a distinguished civil servant, with trade unionists and employers, and it is accepted by the industry and is being acted on vigorously and effectively.
Turning to exports, the fact is that we are doing a good job in exporting, but just not enough by a noticeable margin.


I wonder what the main reasons are. It is clear that there is not a single answer, but a number of answers. I do not believe that our prices are out of line with those of our competitors generally. If we look at our performance in the most competitive market of all, the United States, we have every reason to believe that we can stand up to competition from other countries, and I do not think the effective level of industrial costs of this country and of our continental competitors varies very much. But, clearly, if we want to export, more pressure downward on export prices is needed, and any upward pressure could be quite disastrous.
Then there is the question of delivery. I get more and more complaints about British deliveries, arising partly from delivery dates being too long and partly from them having been broken. The first arises from excessive pressure of the home market. People cannot quote export deliveries quickly because they want to supply the home market. Secondly, there is a failure to meet delivery dates partly because of failure on the part of management, again linked up with excessive demand, particularly for components, but also linked up with strikes, especially in the transport system. My experience is that it is impossible to exaggerate the lasting harm that can be done to British exports abroad by these constant hold-ups in delivery. It is very disturbing indeed how often one hears reports of overseas customers who say that our goods are of the right quality and the right price, but who turn to somebody else because they can be more certain of a fixed delivery date than from this country.
So far as credit facilities are concerned, with the recent improvements that we have made in the services of the Export Credits Guarantee Department, British exporters can offer facilities competitive with those of other countries.
There remains the question of sales effort, and particularly export sales effort, and this is where an improvement must be made. It is wrong to generalise. The best British businesses and the best British businessmen sell as hard, as well, and as effectively as those of any country in the world, but generally, one cannot help getting the impression from reports from overseas ports and visits to

other countries that more consistent sales effort, more consistent follow-up, better after-sales service and more deliberate study of the needs of the customer are essential if we are to maximise our export effort.
I agree with the right hon. Gentleman's remarks on training in salesmanship. We are, in consultation with industry, trying to make progress in improving this aspect. At the moment, there is not so much a lack of facilities as a lack of willingness to use those facilities. The more that can be said about that and the more it can be brought home to industry generally, the better it will be.
The other point about our export trade is how rapidly it is changing in pattern. It is changing in area and by composition. The Commonwealth market has fallen as a percentage largely because the high degree of protection that we had in the Common Market—[Laughter.] I beg pardon; that must have been a Freudian slip of the tongue. I should have said, because the high degree of protection we had in the Commonwealth market some years ago has been gradually eroded. On the other hand, there has been a big increase in the percentage of our goods which are sold in North America.
Equally, there has been a dramatic fall in the percentage of our exports represented by textiles, and an enormous increase represented by engineering goods, metal manufactures and chemicals of all kinds. This points to the fact that we must be able to switch our resources more quickly than we are at the moment, and that if we are to maintain momentum we must concentrate more on those industries which are of outstanding importance and spend less time bolstering up some industries which are of a declining nature.
I believe that our export performance is improving in general, but there are difficulties ahead. The American market is picking up, but, on the other hand, some of the primary producers in the Commonwealth are still suffering from the low prices of their products, and that will last for some months ahead. But I am sure that there is a new and growing spirit in industry generally and a determination to export. The new European Export Council has got off to a


flying start, and so long as the demands of the home market can be kept within reasonable bounds I am sure that we can see an improvement in our export trade in the months ahead.

Mr. Frank Bowles: The right hon. Gentleman and I have had conversations recently on his refusal to grant an industrial development certificate to a constituent of mine, with the result that this constituent refused to go elsewhere in this country and is now developing his industry in Germany, which means that we shall lose £500,000 in exports in a few months' time. Could the right hon. Gentleman explain how much we have lost in exports as a result of the awkward conflict in his duties under the Local Employment Act and in connection with the granting of industrial development certificates to a developing industry such as the one that he has in mind?

Mr. Maudling: I know of no such loss of exports. If in the case concerned the firm goes ahead with what it says, no doubt it will arise. I have to carry out the duties imposed on me by the Local Employment Act, and if I am to do so I must not yield to threats of any kind like that.
To sum up on the current balance of payments, I am sure that we can look forward to an improvement in our general current balance. Equally, I think it is clear that we cannot hope for it to be rapid enough or drastic enough to deal, without such additional measures as my right hon. and learned Friend will produce, with the situation which we face.
I turn now to home demand, which is the other really important factor affecting the strength of sterling. Home demand is rising very fast. The shortage of labour, particularly skilled labour, is becoming more acute, and prices are beginning to rise. These are familiar symptoms which must not be ignored and which certainly will not be ignored abroad.
One of the reasons for the rise in home demand is increasing investment, particularly investment in manufacturing industry, which, I think, is welcomed. When we look for the big underlying factor, I think that it is the rise in personal incomes which has the main effect.

Hourly wage rates in the first quarter of this year were over 7 per cent. up on the level a year ago. That is faster than can possibly be justified by the rise in productivity.
At the same time, dividends went up by 23 per cent. That is far too high by any reckoning whatever. I know that there is a difference between dividends and wages in that one is in absolute terms much greater than the other. There is also the point that it is important to encourage the go-ahead and successful firms to earn more money and distribute more in dividends. But when we look at the total of dividends and wages, I am sure that the same principle must apply to both. If one should not rise in total faster than productivity, neither should the other.
I believe that our general objective is that we should be more competitive and should restrain the pressure of demand If we want to have more competition, one of the best ways of doing it is to reduce tariff barriers. I do not believe that unilateral tariff reductions are sensible, and I hope that we shall be successful in the G.A.T.T. negotiations in making good progress. I have instructed our negotiators there to aim at getting for industry generally the maximum reduction in our protective tariffs that we can hope to be paid for by other people reciprocally in the course of negotiation. I am sure that that is a wise and forward-looking line to take on this matter.
The right hon. Gentleman talked about planning. He instanced France, but not Germany. It is interesting that, while France has expanded fast, Germany, the least planned country of the lot, has, I think, expanded faster than the lot. When the right hon. Gentleman referred to Surtax, for example, he did not mention the fact that one of the main discrepancies between our economy and the German economy, until this year's Budget, was the remarkable difference in the weight of taxation upon leading people in industry—executives, administrators and scientists—between one country and the other.
I do not withdraw anything from the view which I expressed at the time that the reductions in Surtax were an act of social justice. I believe that social justice embraces all classes. It is neither


wise nor fair to penalise success in any activity in life. I am convinced that a more rapid rate of growth in this country will depend on giving the maximum encouragement and incentive to the go-ahead industry, the go-ahead firm and the go-ahead individual.
It is important to know exactly what is meant by planning. I do not regard "planning" as a dirty word. I regard planning as a necessary and inevitable function of both Government and industry, but I think that we should know what we are setting out to plan. In a Socialist economy remarkable results are achieved by total planning, including total planning of wage rates and of demand. I am sure that is not what is proposed by right hon. Members opposite. In a free-enterprise economy, there is a limit to what one can plan, because one cannot plan demand. One can estimate it. One can influence it. One cannot plan it.
I agree that it is very good for a Government to discuss and analyse with industries the prospect of demand for their products. In fact, we are already doing that. In the nationalised industries, iron and steel, machine tools, shipbuilding and motor cars, a great deal of planning in that sense is already going on, planning in the sense of mutual study between industry and Government of prospects and estimates of future demand for the product. We are doing more here than is generally realised. I agree that a good deal more could probably be done and might well be worth doing. On the other hand, I think that the right hon. Gentleman is wrong in assuming that there is a great change which can be made by introducing a centralised form of planning which is really not suitable or adaptable to our economy.
I was saying that we need more competition. Another thing which we need is more flexibility. It is really galling at the moment to see, side by side, industries with long export order books short of labour and other industries with more labour than they can fully employ. The failure of labour to move from one job to another or from one industry to another and the failure of industry as a whole to be adaptable in these matters seems to be one of the limiting factors in our expansion.
We have made considerable progress 'in tackling the problem of unemfploy-

ment. That is true in England and Wales. There are great problems still in Scotland and Ulster—

Mr. Charles Grey: The Government have not done much about the North.

Mr. Maudling: —and the North, too—but in England and Wales generally we have made a great deal of progress in tackling the situation where there is pressure of labour in one area and idle hands in another. This we are doing in geographical terms. It will have to be done more and more in terms of industry, the movement of people out of industries where the order books are short into the industries where the order books are long.
We are often told that one of our failures is to achieve an adequate rate of growth. Some of the comparisons are unfair and misleading. It is wrong to compare figures as between this country and Germany, for example, without taking into account the enormous increase in the working population in industry which has taken place in recent years in Germany for which we have had no equivalent whatever. It is fair to say that our record in exports and in production is very much equivalent to that of America and Canada, the other English-speaking countries. There may well be a good deal of solid reason behind this.
It seems to me that P.E.P. was right in its recent report in saying—I forget the actual words, but the effect was roughly this—that the main reason why the British economy does not grow faster is that by and large, people do not want it to grow faster because, for it to do so, they must make the conscious decision that they want to become more efficient. Having a faster growing and more efficient economy calls for conscious decisions, many of which may be uncomfortable and unpleasant.

Mr. J. T. Price: If that is the philosophy and way of thought which animates the Government today, how can it be rational for this argument to be advanced now in face of the claim made by the right hon. Gentleman who is now the Prime Minister that he expected the standard of life in this country to be doubled in twenty-five years, in other words, that it would rise at the rate


of 4 per cent. per year? We have nowhere reached even that modest figure yet.

Mr. Maudling: The calculation which the hon. Gentleman makes is wrong. It would not be 4 per cent.—

Mr. Price: Four per cent. Was—

The Temporary Chairman (Mr. James H. Hoy): Order. We cannot have more than one Member speaking at one time.

Mr. Price: I want to correct that, Mr. Hoy. The point is that the right hon. Gentleman seriously put to the House and the nation the expectation that the standard of living would be doubled in twenty-five years, which is 4 per cent. per annum. We have nowhere reached that state of affairs yet.

Mr. Maudling: The figure would not be 4 per cent. It is cumulative and the right figure is 2·8 per cent. In the second place, it was not the Prime Minister but my right hon. Friend the Home Secretary. In the third place, ever since my right hon. Friend said it, we have been bang on target.
An ability to grow faster means a willingness to adapt and change. It means a willingness to abandon any unnecessary restraints on output on either side of industry, and it means also a willingness to abandon any unnecessary restraint on training within industry.
I think that one of the most depressing features that I have seen in industry in the last two years has been the failure, which is a failure all round, to train adequate apprentices and skilled men in industry. The blame for this can be widely distributed among all concerned. [HON. MEMBERS: "Including the Government."] No doubt the Government have a share in it. All concerned must make a vigorous effort to get away from outmoded ideas about industrial training in order to make a rapid advance. Growth means a willingness to provide more educational facilities for industry, to use more research intelligently and to study consumer needs. However, it also means a willingness to exercise restraint.
The Leader of the Opposition ended by saying a few words about the nature of the society in which we live. I should like to say one or two things in reply. I believe that we are still facing the fundamental problem of how a free

society can work effectively in conditions of full employment. We have got away from the old, harsh and wrong disciplines of unemployment. Here, I share the right hon. Gentleman's view. It would be wrong to bring those disciplines back. However, if that old discipline of unemployment has gone, there must be something to put in its place if we are to have an ordered community consciously advancing.
Higher wages and higher profits should come from greater output and greater efficiency and service to the community, not from the exploitation of monopoly or semi-monopoly positions. It would be a tragedy if we abandoned the degree of social and economic freedom which we have achieved. Once we started back on that road, Government controls would become inevitable and all-pervasive and the progress that we have made would be lost. We can maintain our freedom and full employment only within a responsible society which recognises, accepts and acts on the need for restraint and self-discipline.

5.2 p.m.

Mr. Anthony Crosland: The last few minutes of the speech of the President of the Board of Trade at least showed that he has discovered the right road to promotion in the present Government. He used a succesion of platitudes which could not have been equalled except by the Home Secretary or the Prime Minister himself. The real trouble with his speech was that it was in exactly the same terms as speeches which he made six or seven years ago. I can remember hearing identical speeches from him in 1953 and 1954. He does not seem to realise that we are not discussing the situation that we had in those years.
In the early 'fifties, when we ran into a similar balance of payments crisis, it was often possible to put it down to temporary factors, ill luck, and so on. But that is not the situation today. Today we are discussing, and in the two days' economic debate next week shall be discussing, something very much more important and decisive than that, namely, the failure of a whole decade of Conservative policy. An occasion like this called for a much more searching, much less complacent and platitudinous speech than we have had from the right hon. Gentleman.
For ten years we have stood condemned as a country in the management of our economic affairs by the three most searching tests that anyone could apply. We stand condemned as having almost the slowest rate of growth, almost the most unhealthy balance of payments position, and almost the fastest rate of price inflation of any advanced industrial country. On each of these points the President of the Board of Trade made one or two extremely complacent remarks, saying that there was always some external cause, some scapegoat or alibi For this state of affairs.
On the rate of growth, the right hon. Gentleman said that to take the gross figures may give a false impression because we must take into account population increases. This has occurred to others beside the right hon. Gentleman. The unfavourable picture still remains, even if we allow for the obvious fact that Germany, for example, has received a large number of refugees from the East. The right hon. Gentleman also said that not only Britain but the United States are going through a period of slow growth. That is true, and it explains the extreme degree of heart-searching which is going on in the United States on this subject at present. It also partly explains why Senator Kennedy was elected last November. I hope that there may be a lesson here for Great Britain.
The President of the Board of Trade then said with regard to our balance of payments that the sums involved are merely marginal and that it would require only a marginal change to turn the deficit into a surplus. Of course, it is only a marginal change, but the interesting question is why this marginal change has somehow evaded us for so long. This suggests that although it is only marginal, a deep-seated change of policy is needed if we are to put the matter right.
It is surely an extraordinary achievement over so many years to have combined these three elements of slow growth, an extremely weak balance of payments and a rapid rate of price inflation. In fact, of course, it is not an accident that the three have gone together, because fundamentally they have precisely the same cause, namely, our slow rate of increase in productivity.

All three are related to some basic lack of industrial efficiency from which the country suffers.
The result is that ten years after the Conservative Party was first elected we find ourselves in a humiliating situation in which sterling is propped up largely by support from the European central banks, and in which German businessmen and politicians privately express nervousness as to what the effect on British public opinion will be in terms of re-creating anti-German feeling if they continue to out-compete us. To listen to such remarks has been one of the most humiliating experiences I have had.
Whatever may have been true in the past, neither the President of the Board of Trade nor the Chancellor of the Exchequer can now point to any outside factor as the cause of our difficulties so that they can avoid blame for the present situation. The terms of trade are highly favourable in this country, much more favourable than most of us a few years ago thought that they would be. Economic activity in the world is at a high level. One cannot find a reason there for lagging British exports. We cannot any longer say that our slower performance is due to the fact that Germany, Japan and Italy are recovering from the ravages of war. Their postwar recovery was more or less complete by 1955. The same unfavourable comparison in the first half of the 1950's has gone on in the second half. There is no external factor which can be used as a scapegoat or alibi for our poor performance.
However, the Government and most financial commentators have found no difficulty in finding a new scapegoat. It has been mentioned off and on in the last ten years, but a great deal more in the last few months, namely, the behaviour of wages. Although my right hon. Friend the Leader of the Opposition said something about this, I think that there are still things which should be made clear. One thing which is often forgotten when the Chancellor of the Exchequer and others talk about incomes and wages increasing at too fast a rate is that over the last few years middle-class income earners have been a great deal more successful than wage-earners in increasing their money incomes. The bargaining power of the industrial trade


unions is a good deal less than that of many middle-class and salaried groups, such as the farmers, doctors and a number of others. It is clear that in the last five years or so the middle classes have been more successful in forcing up their money incomes than the trade unions.
Even if we concentrate on wages, the central point is one which was made by my right hon. Friend the Leader of the Opposition. If we compare what has been happening to wages in this country with what has been happening in other countries, we find that the British movement of wages is not substantially out of alignment. It is possible to find one or two countries where wages have gone up more slowly, but there are a number of countries in which wages have gone up a good deal faster than in this country. In Germany, to take the most obvious example, they have increased by almost an identical amount—in fact, at a slightly faster rate.
The difference between what has happened in Britain as against the rest of the world lies not in the behaviour of wages but in the behaviour of productivity. The fact is that productivity has gone up much more slowly in this country, and this causes us to have this exceptional degree of price inflation. The Chancellor of the Exchequer is right when he says that one of our troubles is that incomes are moving out of line with productivity, but he is quite wrong to fasten attention entirely on what is happening to wages. He should be fastening his attention on what is happening to productivity and on the reasons for our slow rate of increased productivity.
Financial commentators have begun to talk about a possible wages policy in the sense of more Government co-ordination, regulation, supervision, or whatever it may be, of wages. This is an extremely difficult question. One can certainly imagine circumstances in which it might be desirable for the Government to have a policy for all incomes—not just for wages, but for salaries, dividends and so on.
But one must draw the Government's attention to the condition under which alone this could possibly work. There are only two countries in Europe where any kind of a wages policy has worked

at all successfully. It has not worked spectacularly well in either of them, but the two in which it has worked best are Holland and Sweden. Both of these countries are conspicuously characterised by something which is certainly lacking in this country, namely, a high degree of social harmony and an absence of class tension. Both of these countries are characterised, on the whole, by an equal distribution of incomes, a tax system which most people in the country consider just, a much less stratified educational system than we have, and generally a much greater sense of social cohesion and harmony and of belonging to the same society. Nobody who knows either of those two countries could deny that.
It follows therefrom that if the Chancellor is thinking in terms of instituting, in co-operation with the trade unions, any kind of wages policy, no matter what it is, the absolute condition for this is that he must act in such a way as to create that kind of mood in this country. In the last few months, he has been acting in precisely the opposite direction. It will need a major change, not only in his actual policy but in his manner of looking at things, if he hopes to get this kind of co-operation from the trade unions.
It is not only hon. Members on these benches who say that. Even The Times in a leading article last week made precisely that point in language at least as strong as that ever used from this side of the Committee. It cannot be dismissed, therefore, merely as a political debating point.
Our object in this debate, I suppose, is to try to get some idea, which certainly did not emerge from the speech of the President of the Board of Trade, of the basic reasons for our failure and for the mismanagement of our economic affairs over an entire decade. It seems to me that the failure is twofold. First, the Government have never effectively had a long-term economic policy; and secondly, their short-term economic policies have consistently been wrong.
On the short-term economic policies, my right hon. Friend the Leader of the Opposition had something to say about the disastrous effect on our affairs over the last ten years of the way we react


to every successive exchange or balance of payments crisis. It is always the same story of cuts in investment and in demand, with the consequence that we then have a year or more of stagnation of output, and with the further result that because investment does not go up as fast as it should our productivity also goes up less rapidly than it should.
That is a self-defeating policy, quite apart from the loss of output. Fundamentally, our balance of payments crises are due to the fact that productivity does not go up fast enough and we then cure the crises by a method which ensures that it goes up even more slowly. That is quite apart from the loss of output due to the periods of stagnation after each crisis. One sometimes wonders whether if we did not have the occasional carrot of a General Election we would have any economic growth at all. All the indications from the recent speeches of the Chancellor of the Exchequer and from the financial comment are that we shall go through this same appalling round again next week.
First, everybody supposes that the regulator will be used. We must examine this regulator. As I said in the Finance Bill debates, I do not oppose it in principle. I would welcome almost any regulator if it meant more fiscal planning than we have had in the last few years. Like hon. Members on all sides, I am extremely impressed by how much more rapid our rate of growth would be if we could simply make it steadier than it has been in recent years. To make it steady involves much more effective fiscal regulators than we have had in the past.

Mr. J. Grimond: Of which regulator is the hon. Member speaking?

Mr. Crosland: The first one of indirect taxation. Like everybody else, I am assuming that opposition to the second regulator was so overwhelming from all parts of the House, the country and everywhere else, that it will not be used.
The first regulator is suitable only in particular circumstances. It is only suitable, first, when one is not obsessed, as the Chancellor appears to be, by the threat of a wage and price inflation. If the right hon. and learned Gentleman is desperately concerned with that, to

choose such a moment to use a regulator which puts up prices is, to say the least, an extremely dangerous operation. The other criterion which must be satisfied for this regulator to be of any use is that there is a situation of general excess demand. This is a regulator which is supposed to influence demand over almost the whole economy and the whole pattern of spending.
Is there a situation of general excess demand in Britain today? If so, the implications are extraordinary. I asked the Treasury Ministers to explain their views on this point during the Finance Bill, but they have not done so. If there is a situation of general excess demand, we have got into it after a year in which industrial production has increased extraordinarily little. The conclusion to be drawn from that, if it is the case, is that there is hardly any natural growth, expansion or increase in efficiency in our economic system. I find this difficult to believe.
Goodness knows, we are growing slowly, but there is surely some capacity for growth in the system. This makes me sceptical about whether we can describe our situation today as one of excess demand. Once one looks at particular parts of industry, it is hard to take that view. We know that the steel industry, which is a barometer from which can be derived the situation of a good number of other industries, so far from suffering from excess demand, is suffering from heavy over-capacity. The motor industry and almost all the consumer durable industries have no excess demand. We read in yesterday's papers from the statistics of the President of the Board of Trade that retail trade in volume is actually lower than three months ago and lower than it was a year ago.
It is, therefore, difficult 'to say that our position can be described as one of excess demand in which a regulator of this sort would be relevant. It seems to me to be much more a situation of excess demand concentrated on particular sectors. The most obvious sector on which it has concentrated is building. This is where the real scarcity and bottleneck exists. That leads to the conclusion that what we now want is not a blanket measure like this regulator covering all spending, but measures which discriminate at the point where there is the strain.
There have been suggestions in the newspapers that the Chancellor has accepted to some extent the idea of discrimination, because he proposes to cut down public investment to relieve this strain. That is an odd way of dealing with the strain in the building industry. Is it suggested that the strain on our building resources is due to all the marvellous new hospitals that we are building? Is it suggested by the people who are just back from the roads delegation to Europe that our over-ambitious roads programme is causing this excessive strain? Is it suggested that the fault lies with municipal housing, which is running at a lower rate than ten years ago? It is a fantastic idea that this strain has anything to do with public investment, which on the contrary is, if anything, too low relative to private investment. Plainly, the strain comes from the high level of commercial development that is now taking place.
I should be delighted if that commercial development were restricted. Apart from the economic argument, the social argument which I feel strongly is that until the Minister of Housing and Local Government has produced a plan to ensure comprehensive and not piecemeal redevelopment of our city centres, the more we postpone commercial development the better.

Mr. William Shepherd: Is the hon. Member seriously suggesting that action to deal with building at this moment of time could really be effective in doing anything of value to relieve the pressure? Does he not realise that such things are contracted for sometimes as much as two years ahead?

Mr. Crosland: I am simply taking what I assume the Chancellor is about to do and what he certainly has done in previous years of crisis—namely, cut the rate of public building—and I am saying that if that can be effective in the public sector, it can be equally effective in the private sector.
There have also been suggestions in the Press that the Chancellor might react to this situation by cutting our economic aid. This is a very disagreeable suggestion. The President of the Board of Trade prided himself on the fact that our aid has gone up a great deal in the

last few years. In relation to the standard of living in this country, however, it is far from being excessive. To put it mildly, I would find it repulsive if, with a standard of living which is thirty times as high as that of India and most of the other under-developed countries, we were to cut off £50 million to ease some temporary balance of payments difficulties. I do not want to make too cynical a point, but if there is to be talk from the Government of a new sense of moral values, this is not the way to start off the new era.
I want to be brief on the question of long-term policy, because my right hon. Friend the Leader of the Opposition spent most of his time on this aspect. Despite one or two of the gibes of the President of the Board of Trade, there probably is increasing agreement, except on the Government Front Bench, about what kind of long-term policy we want in order to get rapid growth, from which everything else springs. I am certain that we want more planning on the French model. Constant references were made to French agriculture by hon. Members opposite when my right hon. Friend was speaking about this. People cannot know France well if they do not see the disruption caused in French agriculture now by the insertion of new methods into it. A revolution is going on there at the present time at extraordinary speed, which is why the Breton farmers drive to the town hall in their tractors. I am certain that we need more planning on the French model. We also need higher investment as long as it is well directed and does not go into the building of new Cunard liners.
I agree with the President that we need more competition. We also need a much more positive policy for backward industries involving definite Government intervention in order to galvanise them into a more rapid growth. I believe that we need, although some of the Empire Loyalists opposite and the more recent ones on this side of the House do not agree, a certain redirection of our export markets from the Commonwealth markets, which are reclining, to the more expanding markets of the—

Mr. Michael Foot: Is the hon. Gentleman suggesting that it


would be in accordance with the new moral values about which he has spoken that we should diminish our trade with the under-developed areas?

Mr. Crosland: Our trade with those areas is small compared with our trade with the white Commonwealth.

Mr. Foot: Would the hon. Gentleman argree that there is an argument against these areas having to push their goods into this country over a higher tariff? Does he really think, in his reference to this matter, that it is suggesting a moral course by injuring our trade with these areas?

Mr. Crosland: I do not wish to become involved in an argument about Europe. I am very far from unconcerned about the problem of India in finding markets for her manufactured exports, but it is not going to depend simply on this country's market whether she finds the markets she needs. It will depend on whether she can be aligned with the rapidly expanding markets of the industrial Western world.
There are all kinds of other things which we need, but the last point is this. I am certain that none of the planning, higher investment, greater competition or anything else will be at all effective unless the Government show a quite different quality of leadership from that which they have shown in the last ten years. This brings me to the point made by the President of the Board of Trade about Germany.
In answering my right hon. Friend, he said that the French perhaps need planning but that the Germans have a rapid growth without any planning. It might be the case, if we had in this country a business class as efficient, as dynamic and enterprising as the Germans have, that the Government could sit back and hold the ring and that rapid growth would occur by itself. But we do not have such a business class.
Everything which the President of the Board of Trade said about business attitudes to sales effort shows that we have not such a class and never have had since the early Victorian days. There is evidence to show that this did not even start when the Tory Government came in. It goes back in this country something like 100 years. We have not a business class of that kind, and, that being so, rapid

growth will not occur unless the Government give a lead and show a definite will to growth—unless they engender a positive psychology of growth and give the impression that in the interests of rapid growth they are willing to break with their own ideology and indulge in much more purposive intervention than they have done in the last ten years.
Whether the present selection of Ministers is capable of doing that, I have the greatest doubt. I am certain that this lead cannot be given and that the policies that follow from it cannot be adopted unless the Government sacrifice a good deal of their present ideological commitments and are willing to take over a very substantial part of a social-democratic economic policy.

5.25 p.m.

Sir Henry d'Avigdor-Goldsmid: This debate is in the nature of a trailer for the big performance next week, and I think that it would be appropriate for me to congratulate those talented performers who have already shown their possibilities today in preparation for the bigger stuff. But I do not think that we can get down to any real discussion while my right hon. and learned Friend's proposals remain clouded in secrecy.
The hon. Member for Grimsby (Mr. Crosland), at the beginning of his speech, described the present Government as presiding over a decade of Conservative policy failure. When one analyses that statement it is really most extraordinary. In fact, what was the condition of affairs at the beginning of the decade compared with what it is now? His right hon. Friend drew attention to the fact that we made the great mistake of investing £1,000 million long-term over the last decade. He also drew attention to the fact that we had had this vast import of ladies' clothes from the Continent. With the best will in the world, it cannot be said that it is the salaried classes whose standard of living has improved so much which have caused these imports. It is, in fact, the great rise in the standard of living of the working classes of the country.
I am bound to say on that point that there is only one real economy in the world that has gone really backwards in the last ten years, and that is the totally planned economy of Poland. So I think


that the less we hear about the failure of this decade when it has so much achievement in it the better. Five weeks ago, on 15th June, the Financial Times industrial index reached its peak. I mention this fact because share prices are only one indicator. Even if the buyers who paid the highest prices of the year on 15th June were not particularly intelligent, at any rate the wise investors did not sell at that time. Therefore, it suggests that there was a general feeling of reasonable confidence in our industrial prospects. Then, of course, we all got nervous.
On 22nd June, my hon. Friend the Member for Louth (Sir C. Osborne) wrote a letter to the Daily Telegraph headed, rather inaptly, "Woman the Worker" and finishing with the words:
Is there no economic Churchill who will save the nation despite itself?
This heart-cry was taken up by the Economist on 24th June. Then we had my hon. Friend the Member for Louth once more, on the Third Reading of the Finance Bill on 6th July, saying:
In some respects, we face a graver economic crisis than at any time since 1931."—[OFFICIAL REPORT, 6th July, 1961; Vol. 643, c. 1694.]
That is sheer nonsense. In 1931 our gold reserves were £134 million, and we had 2,800,000 unemployed. These figures bear no relation whatsoever to our condition today. There is, it seems to me, an overwhelming desire on the part of commentators to maximise the difficulties in which we find ourselves. My hon. Friend the Member for Louth, not content with his effort in the Third Reading debate of the Finance Bill—mainly out of order, as far as I remember—reverted to the Daily Telegraph of 14th July. The cry there was "Backs to the wall". Then, of course, the warnings came fast and shrill. My right hon. Friend the Chancellor has not been backward, but I would remind him of something which took place many years ago, in 1931. In 1931 one of the responsible officers of the Republican Party in the United States was a gentleman called Mr. Simeon Fess, and Mr. Simeon Fess made a dramatic statement. He said:
There seems to be a conspiracy in the market against the Government. Every time an Administration leader outs out an optimistic statement the market falls five points.

We have not reached that point yet, because when my right hon. and learned Friend puts out a pessimistic statement the market goes down. It evidently considers that he is on the ball.

Mr. A. E. Cooper: Let me sympathise with my hon. Friend. Yorkshire won by two wickets.

Sir H. d'Avigdor-Goldsmid: I am sure that the Committee is much obliged for that information.
The utterances of my right hon. and learned Friend are watched with considerable interest and in fact the market seems to behave very much as he indicates our prospects to be.
But what in fact is our situation? We face a deteriorating balance of payments Which was very bad last year, and only slightly better this, and the whole urgency was triggered off by what I call the German revaluation of last February, because that action by the German Government of altering their exchange rate without consultation with any other nation caused a tremendous currency upheaval. There is a morbid attraction, I think, in currency speculation, especially as it is always carried on by the most respectable people such as banks, and because of that morbid attraction there was an immediate run on sterling for which there was no justification in the economic facts of the time but which was simply based on the principle, "The mark has gone up, sterling is likely to go down. It is the next one to go." As a result the figures have got worse, and there has been a considerable genuine run on the pound and we are in the situation in which we see ourselves today.
I am very glad that the President of the Board of Trade did draw attention to the dimension's of the problem because with a gross domestic product of over £22,000 million we are facing now a deficit in the balance of payments of £200 million, or 1 per cent. This 1 per cent., as he pointed out, is something which can unquestionably be remedied without much difficulty. The real basis of our unease is, to my mind, that the short-term remedies of our situation are likely to aggravate the long-term maladies. It is perfectly clear that in the short-term we can by deflation restore confidence. The money will return here,


the exchanges will flow freely, and we shall obtain a period of respite, but I think there is a growing realisation that this short-term remedy is not going to remedy the long-term position.
As far as the short-term goes, we shall hear about that next week, but I have no doubt that as either we shall be seeking to borrow money or, at least, be seeking to retain money which is already here, we shall have to do two things. We shall have to pull in our belts in some disagreeable way so as to suffer, so as to satisfy our creditors that we are suffering and we shall probably have to pay them a higher rate of interest and I have no doubt that a series of actions of a masochistic nature are to be called for next week. I am quite certain that we shall respond to them, but I would say to the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) and to other hon. and right hon. Members on the other side of the Committee that these remedies will not be effective in restoring confidence in sterling unless they make the maximum protest against them. Only if they make the maximum protest against them will our creditors feel that our Government are determined to save the pound.

Mr. Harold Wilson: A further condition, clearly, on the basis of past experience, must be—not only a protest against them—that they are totally irrelevant to improving the economic situation of this country.

Sir H. d'Avigdor-Goldsmid: I do not think that our creditors are quite as dumb as all that.
The real question is not the short term but the long term, and the long term is the one which we have to face. Frankly, I was rather taken by a suggestion in one of the Sunday papers that we should have an autumn Budget for expansion, because I do not think that we can in the course of my right hon. and learned Friend's statement next week, however lengthy, deal with both the short term, which is disagreeable, and the need for expansion in the long term.
I have tried to cudgel my brains for a few things which could be helpful to both. One suggestion I would give my right hon. and learned Friend is the question of the exporting industries. It is a matter of real importance, for sup-

plies to the home market are paid for with a delay varying from two to four-and-a-half months and there is no real reason why exports should not be paid for the day they are shipped. I really believe, although the Government have gone a long way to meeting credit needs of exporters through the export credit guarantees, that there is still a requirement for immediate cash. At the present moment all these export credit guarantees and bank charges of various sorts and interest add to the cost of exporting. I believe that it would not be considered as a subsidy to exporters if the Government were willing to take action so that exporters delivering their shipping documents should receive cash and should receive cash on the nail.
I was talking about it to a rather prominent manufacturer today and he said, "Ah, this would distort our pattern, and we could be lured away by ready cash and ignore some of our customers in the home market." My feeling is that that might not be such a bad thing after all.
However, I would urge on my right hon. and learned Friend—through the medium of the printed page—that he does not indulge in the sort of gimmicks which are being freely canvassed at this moment, and above all, that he divests himself of the illusion that entering into the Common Market is going to solve any of the problems we are up against at the present moment.
Of course, the theory can certainly be well and clearly expounded that we can enter the Common Market and that we can compensate the home agriculturist in some way for any loss of his support prices. We can tell our friends who joined with us in the European Free Trade Association, like allies in war, that we have had a reverse and that they must now make the best of their way home. We had to do that to some of our allies in war. I should be sorry to think that we should adopt that same policy in peace time. Of course, we could take the view that the Commonwealth is an institution of narrow-minded farmers for whom we need no longer take responsibility. All this is a tenable theory.
In this connection there was a very pregnant statement which Lord Beaver, brook denied having made, and I think that sometimes what Lord Beaverbrook


denies having said leaves us with as much food for thought as his reported utterances. What he is reported to have said and has denied saying is that the Common Market represents an economic Munich which will surely lead to an economic Dunkirk.
I should like to elaborate that a little. I notice that in 1958–60 in our transactions with the E.E.C. both our imports and exports have gone up by 24 per cent. There has been no significant change in the balance. On the contrary with the E.F.T.A. countries, our exports in the same years 1958–60 are up by 20 per cent. and our imports are up by 27 per cent. I feel that that is pretty convincing proof that if we found ourselves in the Common Market we might find the same swing in our bill for imports without any corresponding improvement in our exports.
If we enter the Rome Treaty it will certainly involve devaluation and whether we do it voluntarily, as the French did, before joining and therefore gain some benefit from it in their way, or whether we do it later because it is forced upon us, the result will be the same. Many of the people, and particularly those abroad, who are so clamorous with the suggestion that we should go into the Common Market are making that suggestion because they want to see us devalue.
An advantage of this debate to the back bencher is that at least one can have the privilege of saying to my right hon. and learned Friend what he ought to do. After all, next week I shall know what he is doing and I shall be here to support it. First, I would say to him, as his commander, Field Marshal Montgomery would no doubt agree, that no general ever won a battle by arriving on the pillion of a motor cycle to deliver his orders. I urge my right hon. and learned Friend to give the appearance at least of greater equanimity. Confidence is what we want from him, not the ability to hop a lift. Even reaction against the majestic shadow of Mr. Gladstone, which no doubt made an appearance at Hawarden at the time, could not justify that act.

The Financial Secretary to the Treasury (Sir Edward Boyle): I have heard, as others have heard in the Treasury, a

full account of that episode. It was perfectly rational, and I cannot see any particular virtue in a Chancellor arriving late for meetings when it is possible by taking ad hoc action to arrive on time.

Sir H. d'Avigdor-Goldsmid: I am not in favour of Chancellors who arrive late for meetings either.

Mr. John Page: I never had the opportunity of carrying Field Marshal Montgomery on the back of a motor cycle, but I took one of his corps commanders rather urgently to deliver orders on one occasion.

Sir H. d'Avigdor-Goldsmid: I hope that episode ended victoriously.
I recall reading an account of a conversation between the Duke of Wellington and Lord Uxbridge on the eve of Waterloo in which Wellington said:
What the future holds is unknown—what we do know is that each of us will do his duty.
Let my right hon. and learned Friend take the nation into his confidence and the nation will do its duty. There is no doubt in any of our minds, however we discuss this matter across the Floor of this Chamber, that a modicum of restraint now will save us in future from the humiliating sequence of boom and bust which we have known for a great number of years. Let us be adults about our responsibilities. If we meet our responsibilities, we shall do our duty not only to ourselves and to the nation but to the whole free world.

5.45 p.m.

Mr. H. Rhodes: Whatever may be the merits of the advice offered to the Chancellor of the Exchequer about accepting a lift on the back of a motor-cycle, all I know is that if the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) had given the advice which he quoted from the Duke of Wellington to the party opposite when we were preparing for the last General Election it would have been more to the point. The number of times that we have heard about the groundnuts scheme will be nothing to the number of times we shall hear about the country never having had it so good. I would now supplant that slogan of our never having had it so good with "It was good while it lasted."
Let us consider some of the factual history. There were three resignations from the Treasury Bench a few years ago over a matter of £50 million. It was only a "small amount", it was only "marginal". The Bank Rate was raised in September, 1957, from 5 per cent. to 7 per cent., and the following spring there were the three resignations. Why? It was because a General Election was pending and their policies did not suit.
On 3rd July, 1958, restrictions on hire purchase were removed. In the same month the banks started taking over the hire-purchase houses and personal loans began to be made. In October of that year the Prime Minister went to Harrogate to talk to the Cotton Board conference, to sense the feeling and to see whether there was any question of the Tory Party losing seats in Lancashire.
The right hon. Gentleman was very astute. Had he not been clever enough to interpose himself to take the place of a Prime Minister who had failed? He got away with Suez, and he got away with the last election as well. When the right hon. Gentleman went to Harrogate he found that there was grave doubt whether the Tory Party would hold the seats in Lancashire unless something was done. And something was done—the very thing that the President of the Board of Trade talked about today—by bolstering up old industries with £30 million.
This is how things went. In September, 1957, the Bank Rate was increased from 5 per cent. to 7 per cent. On 22nd May, 1958, the Bank Rate was 5½ per cent. In June, 1958, it was 5 per cent. On 14th August, coinciding with the free-for-all, the personal loans, the banks taking over hire purchase and all the rest, the Bank Rate came down to 4½ per cent., and in November of that year it came down to 4 per cent. The Bank Rate never altered again until the election was safely over. It is significant that on 2nd June, 1960, it went up to 5 per cent.
I say to the Government that politics of that description are over and done with. It is time that we had more honesty from our political parties, who should say what they mean. It is no use putting out a bogus prospectus, because the country is bound to reap some of the returns. If the advice which

is being given to the Government about how to put their house in order is known now, it was known in those days. The Government and the Tory Party should be thoroughly ashamed of themselves for having misled the country as they did. Laughing the matter off will not do.

Mr. John Arbuthnot: Would the hon. Gentleman feel that he could afford to make this sort of remark had his party gone to the country on a platform of austerity?

Mr. Rhodes: We know very well what the response was when Sir Stafford Cripps made the kind of appeal to the country that is to be made next Tuesday. Whenever he made such an appeal the capitalist newspapers described it as "Austerity Cripps at it again". But that will not be the reaction next Tuesday. It will be pointed out then that here is a brave Chancellor doing his duty by his party for his country. That is the difference between the two sides of the House.
There has been glib talk in the past about production and productivity. My hon. Friend the Member for Westhoughton (Mr. J. T. Price) has reminded the Government of their statement that the standard of living could be doubled in 25 years. I certainly do not take exception to a claim doubling our standard of living in 25 years, and I do not see why it should not be done if we have the right policies. But will the Government tell the country what is enough, in terms of productivity over one year or two years, or ten years, in order to achieve this target?
This target cannot merely be achieved in six or twelve months. Productivity has to grow, and the aim must be commonly accepted by both sides of the Committee if we are to do anything about it. Will the Government tell us what they think is a reasonable increase in productivity to meet the needs of the times? Is it 2·8 per cent. or 3 per cent., or 3½ per cent. or 4 per cent.? Once we know the figure we can then get down to the job of achieving that productivity.
The Chancellor of the Exchequer does not really know what our productivity is because there is no real measure of it. The way we try to measure it at the


moment is by output per man year. The Index of Industrial Production is divided by an index of employment in industry. I shall not bore the Committee by recalling what the Council on Prices, Productivity and Incomes said about this, because I do not want to be too long.
The other indicator is that of net output per person employed, as shown in the census of production. There is another alternative—to attempt to get figures of output per operative in terms of physical units of the product; but this cannot be done because it is too detailed. I have wondered whether it was possible to break down manufacturing industries into their particular sections—up to, say, 14 divisions. The measures which we have at the moment are not accurate, because the criteria have been altered so often. The 1948 figures formed the basis of the gross national product until 1954. Prices have gone up in the interim, and the productivity figure which emerges, after the employment figure has been divided into the gross national product, is wrong.
I ask the Government to get down to the question of assessment of productivity and of how much productivity is needed. This will have to be done in the end, either by the present Government or by a Government from this side of the Committee. If the Government want their policy to be effective, they must face the people with a challenge—the challenge of being able to do as well as or better than anybody else abroad. In my belief, this can be done if the facts are brought home to industry, but industry by industry.
During the last ten or fifteen years there has been a big increase in the application of work study. If the Chancellor cannot give his views on this tonight, I ask him at any rate to think seriously about whether our industries should take the responsibility for the compilation of their own productivity figures. If they could bring them forward every twelve months, then, instead of our having that abortive debate on the state of the economy every November, we would be able to pinpoint the industries which, from the productivity point of view, are doing well or badly.

Mr. Ellis Smith: Work study for the workers while everybody else goes at leisured speed.

Mr. Rhodes: Yes, but that is not all. I want to tackle the problem of how to assess productivity.
The Government betrayed the confidence of the people by their approach to the last election. They will never live that down. Confidence must be given to the people on the shop floor that they are having a fair crack of the whip and that two societies are not evolving—one getting its money in capital through the Stock Exchange and the other having to earn it. Platitudes and sermons are no use. We must finish with them and get down to setting an example to those whom we are trying to influence.

6.0 p.m.

Mr. John Arbuthnot: The speech of the hon. Member for Ashton-under-Lyne (Mr. Rhodes) showed some sound common sense when he got away from politics. He was absolutely right when he said that if we present an industry with a challenge and show what is the target which it is expected to reach, it will meet that challenge. It will help us enormously in improving productivity if we can show industry by industry what is expected. The hon. Member himself is a distinguished pillar of his own industry and knows what he is talking about.
There has been general agreement in the debate about one or two things. We all agree that productivity is not as high as it should be. We all agree that home demand is too high, that our exports are insufficient and that it may well be that only by diverting from the home demand to exports a larger proportion of what we produce and by increasing productivity shall we solve our problems.
Recently, we have read in the newspapers articles suggesting that our present plight is due to our selfishness in one form or another, that we are trying to take too much out of the world pot. I do not think that that is so. I do not believe that it is because we demand too much as a nation that we find ourselves in economic difficulties. There is no doubt that much of what we demand goes to help under-developed


countries. Some goes to the defence of countries which are unable to defend themselves. There is the defence of Hong Kong, for example. There is the money which we have spent in defending the Cameroons, the money spent in Germany, to say nothing of Kuwait. It has not been an entirely selfish exercise which has brought about our present position.
What we blame or whom we blame for our economic plight may depend on the part of the political spectrum to which we belong. Some people blame the Government for failing to take the lead given when he was Chancellor of the Exchequer by my right hon. Friend the Member for Monmouth (Mr. Thorneycroft) and for allowing my right hon. Friend the Minister of Education to make a speech in this House in which he said that our expenditure on education was now £700 million and would be £1,400 million by 1970, without anybody saying him nay. Some will say that it was the Government's fault for not resisting wage demands more firmly.
On the other hand, others blame the leaders of industry for allowing wage increases without resistance, knowing that they could carry those higher wages by increasing prices to consumers who had money to spend. This it has been said has set the pace for increases in salaries in Government services, thus increasing the cost of government. Others would say that one of the causes was high profits, while others still would say that the trade unions are abusing their power and holding the country to ransom.
I am not concerned with allocating blame. Probably none of us is blameless and, if we are honest, most of us will agree that we have our own particular Achilles heel on which we want greater expenditure. I am concerned with what we ought to try to do to put matters right.
Let us for a moment direct our attention to our own system of estimating here in Parliament. Not long ago, the word went out that expenditure for the current year should not exceed last year's expenditure. I believe that it was only the Ministry of Defence which achieved that objective. It is not only the original Estimates which are at fault. They are added to each year by Supple-

mentary Estimates to take account of matters not foreseen when the original Estimates were prepared.
No business could run on those lines, or it would soon go bankrupt. A household budget cannot run on those lines. At least, I do not imagine that there is any hon. Member who is prepared to allow his expenses to go rip-roaring up in one direction without economising in another. As a nation we ought to copy what we do in our family budget, or in our business.
We know what our national income is, and when the Estimates are being prepared, we ought to agree what proportion should be spent by the Government and what proportion left in the pockets of the people. The proportion to be spent by the Government should be allocated to the various Departments. If during a year a Department says that it wants to spend more on a particular item, permission to do so should be made conditional on its making a corresponding saving elsewhere so that its total allocation is not exceeded. It is a tragedy that the success of a Minister should be judged, and I fear that it is, by the amount of money which he succeeds in extracting for his Department from the Treasury.
Next Tuesday, my right hon. and learned Friend will be telling us of his proposals for correcting the country's financial plight. The country is prepared for him to be thorough. We want on half-measures. We want him to lay a firm basis on which our industrial production can go ahead in the certainty that there will be no need for further checks. I very much endorse the words of the hon. Member for Ashton-under-Lyne, that one of the important things is that our increase in production should be steady and should not go by fits and starts.
We may be entering negotiations about the possibility of our joining the Common Market. I am not taking a view whether we should or should not, but there is the possibility of our entering those negotiations. We shall be in no position to bargain successfully if our economy is weak. The nation looks to my right hon. and learned Friend on Tuesday to take such measures as are necessary and for the lead to strengthen it.

6.9 p.m.

Mr. John Hynd: I do not propose to follow the hon. Member for Dover (Mr. Arbuthnot), although I should have liked to have had time to take up some of his arguments about private business not being able to run on the basis of giving estimates which it subsequently had to increase. That is not an unusual experience. I should have liked also to discuss his theory about Government Departments having to plan exactly for the year and meeting extra expenditure by cuts elsewhere. I do not know what the War Office would have done about Kuwait, for instance. Presumably, it would have had to sell 2,000 or 3,000 tanks, or something of that kind, to balance the account after an incident like Kuwait or Suez. I do not think that those matters are relevant to the question about which we are concerned.
I begin by commenting on the general approach of the President of the Board of Trade to this question. The Committee, and the country, will be struck by the fact that the Government, who have for so long been trying to claim credit for the relatively satisfactory position at which we arrived in the years after 1951, are now trying to reject any portion of the blame for the situation in which we find ourselves after ten years of Tory Government.
As one of my hon. Friends said, the President of the Board of Trade was trying to find scapegoats in every direction—not only the trade unions but the employers as well. Here we have a Conservative Minister trying to tell private industry how to run a business. Apparently, the man in Whitehall knows best. The President of the Board of Trade was telling it that it should not be so concerned about selling on the easy home market, but that it should sell more abroad. What is private business for? The whole purpose of it—which the Tory Party claims to support—is to sell in the easiest market at the biggest profit. Private businesses are not concerned about the long-term interests of the Tory Party or of the country. They are concerned only about selling in the easiest market at the biggest profit, and that is what they have been doing.
The President of the Board of Trade also lectured some of the bigger firms

who apparently have been retaining workers and not keeping them fully employed for every hour of every day and every day of the week, and suggested that these firms should dismiss some of these workers so that they can go to other industries. Does the right hon. Gentleman think that the bigger firms keep these workers on as a form of charity? Does he not give employers credit for their industrial and economic intelligence? They retain the workers because they feel that it is necessary and desirable for their business to do so. These are some of the considerations which apply in private industry and which the Tories will have to accept if they want to stick to the idea of leaving private industry to run our affairs.
As has been said over and over again during the debate—although it was not apparent from the speech of the President of the Board of Trade—we are not facing the kind of routine crisis to which we have become accustomed during ten years of Tory Government. The situation today is very much more serious than was evident from the statement of the President of the Board of Trade. The Daily Mail, and other papers, made this clear the other day when, in anticipation of the statement which the Chancellor of the Exchequer is apparently to make next week, it said:
The measures he will announce next week will be unpopular and unexpected. The key word is 'unexpected.' If we were to get the same old crisis routine we should despair.
The Daily Mail went on to say that the old crisis routine which the Government over and over again had assured the country would cure the ills from which industry and the economy had been suffering had failed, and it took the view that if this routine was tried again we should despair completely.
It is true that wages and wage increases play an important part in this situation. Workers are asked to make sacrifices. They are asked to accept a policy of wage restraint, and they are even threatened that if they do not accept such a policy it will be imposed on them. How will such a policy be imposed? The workers of this country are not averse to making sacrifices for the good of the country, but in return for doing that they are entitled to ask a few questions.
The first question is, who is responsible for the situation in which we find ourselves today? If the workers had been able to hear the President of the Board of Trade today, and if they were able to hear the Chancellor of the Exchequer next week, I am sure that they would realise that the Government are responsible for it. The Daily Mail says, and Ministers have said, that the old remedies are not relevant to the situation today, but it is the old remedies upon which the Government have based their policy. The situation today is an admission of the failure of Government policy. The Government produced this situation, and they are now admitting it. This admission is not surprising to those of us on this side of the Committee who for ten years have been trying to persuade the Government that that kind of policy could have no long-term benefit for our economy.
The Government's method of trying to beat the kind of situation we are facing is to bring in the old remedies—restrictions followed by a free-for-all, inflation at home, and so on, with a resultant fall in exports. The admonition to export more and sell less lat home has no effect on an economy which is based on the will of the private individual who is concerned only with his immediate profits.
Another question which the workers will want to ask is why, when we get into a situation like this, it is the workers who have to make the sacrifices. I know that appeals have been made by Ministers to private industries and speculators to restrain dividends and profits, and we know what the Tory Press says about the response to that kind of appeal. During the war there were constant scandals about profiteering, black marketeering, and junketing in the big hotels and elsewhere while the rest of the country was engaged in a battle of blood, tears and sweat. Who was doing the black marketeering, the profiteering and the junketing? Who were the people who were making millions during the war? Were they steelworkers, railwaymen, miners, or who were they? The people who were making the money were the financiers, the speculators, the people in big business, the people who had plenty of money and were able to use it, as money can always be used, to obtain

privileges which were not available to those who were busily engaged in the hard work of producing the goods.
After the war when there was still a grievous shortage of food and an urgent need for more houses to replace those which had been destroyed. Who were the people who were clamouring for the precipitate abandonment of rationing and building controls? They were not to be found among the steelworkers, the railwaymen or the miners. They were the people who could see opportunities for building up wealth for themselves by the abandonment of building controls. That was the prime consideration, and hon. Gentlemen opposite know that as well as we do.
Reference has been made to incentives in Germany and France. The President of the Board of Trade suggested that Germany was a wonderful example of how success had been achieved without Government planning. This is a great stronghold of free enterprise. Let me remind the right hon. Gentleman that Germany's post-war prosperity has been achieved primarily because as soon as they were able to do so after the war the German Government completely rebuilt the infrastructure of their economy and did not spare money or effort in doing so. Consider what has been done for the German railways. The stations are a wonder to anybody who sees them. The new trains and services are an amazing achievement. They are ultra-modern in most cases.
What has happened to our railways? We are still running on old dilapidated lines. We are still using old dilapidated stock. Year after year the Government have refused the railways the opportunity of rebuilding themselves. It is no wonder that the German economy has gone ahead, and the same can be said about many activities in Germany.
What about their export trade? Their greatest export has been the Volkswagen. That was a Government concern and a Government enterprise. One of their other big achievements since the war has been in shipbuilding and shipping, and many shipbuilding concerns belong to the Government. It is true that Dr. Erhardt has said that he will dismantle them, just as we tried to dismantle road haulage. He will probably achieve the


same results. But progress in the German economy has been in great part due to the fact that the infrastructure was rebuilt, even by a German Government claiming to represent private enterprise as against State planning.
Another factor to bear in mind is that the incidence of strikes in Germany has been the lowest of any industrial country in the world in the last five or six years. It has been lower than this country, France, Italy, America or anywhere else. This cannot be separated from the fact that, seven or eight years ago, Germany established a system of workers' participation in the control of industry—

Mr. Shepherd: Mr. Shepherd indicated dissent.

Mr. Hynd: The hon. Member for Cheadle (Mr. Shepherd) shakes his head, but under the German law they have estalblished the so-called Mitbestimmungsrecht in which the workers in the great coal and steel concerns have a 50 per cent. representation on the boards of management, with equal access to the books and knowledge of every activity of the industry, and where even the workers in the small concerns have representation on the boards of management and full information about what is going on in their industry. Under that system the workers are not only fully apprised of events but have an equal share in the product of the industry.

Mr. Shepherd: I was not shaking my head to deny that this system exists, or that it has its effect, but I am sure that the hon. Gentleman knows why there has been an absence of industrial strife in Germany. The first reason is the large amount of labour which has come from the East and the second is the fear every German has of inflation, which has damned German lives on two occasions.

Mr. Hynd: I do not accept that for a moment. In spite of the 7 million refugees now in Germany, the 2 million or 3 million foreign workers—Italians, Spaniards and the rest—and the continuing flow of refugees from the East, Germany still has over-full employment. There is no pool of unemployed to force the unions to accept lower wages. The trade unions have a direct say in the distribution not only of wages but of profits in the industry, and in investment policies and the rest.
This country, however, finds itself today in the same position as it has been in year after year under the present Government. There is a crisis, inflation, and therefore the need for sacrifice, so the Government put up the Health Service charges; they raise the contributions to the National Health Service which are paid by the ordinary workers. For what purpose? In order to be able to distribute more largesse to the people who do not need it. They make Surtax concessions. They give money to one class and put an extra charge upon another.
Do the Government and the party which supports them expect the workers to swallow this for ever? There has been much talk in the newspapers about sticks and carrots. I read in one newspaper that industrialists respond better to carrots than to sticks. Why should not that apply to the workers? Why should it be carrots for the industrialists and sticks for the workers? We hear about the incentives which are necessary for the boards of directors—for the people who are presumably responsible for whether or not we produce or export. In a recent issue of the Sunday Express there was a reference to "the mighty Guardian Assurance." The members of the board of that company are aged 72, 77, 76 and 73, respectively, and of the other thirteen directors one is 74, another 76 and a third 72. Are these the sort of people who need to be given more incentives to build up productivity? Will they thus be inspired to produce more for export and build up the country's economy?
Are the workers to be expected to swallow appointments such as that of Dr. Beeching to British Railways, with an immediate increase of £230 a week above the salary paid to his predecessor, plus what he gains from the recent Surtax concession? Having had an increase of £230 a week in his salary, his first job is to persuade the railwaymen that it would be disastrous to the economy of the country and of the railways if they received a few shillings extra in their wages. We cannot expect railwaymen to accept that. I know that in bulk the total amount of those few shillings amounts to more than the £230 a week extra for Dr. Beeching, but there is the appearance of justice to be considered.
Dr. Beeching has made a statement to the effect that he is not averse to an increase in wages for railwaymen, but it cannot be given unless it is matched by an increase in production or productivity. What can that mean to a railway signalman, a driver, or a fireman, or to many other grades in British Railways? Must a signalman drop his signals oftener, whether a train is coming or not? Must a gatekeeper open and shut his gate more often, whether a train is coming or not? What does it mean? If wage increases are not justified until there has been an increase in productivity, why should not Dr. Beeching's increased salary have waited until he had shown that he was making some contribution to increased productivity?
If incentives are necessary for directors in order to get more effort out of them, why are they not necessary for the workers? If we believe in this theory, why do not we try offering an immediate all-round increase in wages to the workers, and then wait to see if it results in increased productivity? The truth is that the Government do not believe that these incentives mean increased productivity from directors aged 74 or 76, or from the Dr. Beechings; they are concerned to redistribute the wealth of this country, and put more into the hands of the people they support and who support them.
Our workers are not unpatriotic. We have only to read the speeches of any Tory Minister during the war to realise that when the country is in need the workers are prepared to react. But they are not stupid. We can fool all of them some of the time, and some of them all the time, but we cannot fool all of them all the time. The other day the Daily Express printed something of a kind which one can read almost every day in its gossip columns. It quoted a certain person as saying:
I am used to meeting lavish spenders. But yesterday I met one who is a rather more colourful personality than most—who spends about £60 a week on drinks, and a large part of his life in West End clubs. This was a Mr. John William Goodburn-Nelson who was knocked unconscious in a fight after appearing in court with Arthur Mason, husband of actress Vera Day.

Apparently Mr. Goodburn-Nelson, who is 31, began his day
with a breakfast of tea, whisky, coffee and brandy.
Our newspapers are full of this kind of thing, every day of every week. How can we ask the workers to agree to our giving Surtax concessions to this kind of person—to increase his incentives to productivity and exports—while, at the same time, we ask the same workers to forgo any demand for increased wages because the country cannot afford it?
Where the money goes under a Tory Government, everybody knows. I remember that following the Budget of 1954 there was a series of company reports in the newspapers. One of them said:
Back in the chair of Associated Electrical Industries Limited, Viscount Chandos celebrates by reporting record trading profits of £11,736,000, a rise of nearly £1 million on the year … the total tax bill at £7,224,000 is £588.000 down, thanks to the abolition of E.P.L."—
the Excess Profits Levy. Viscount Chandos was a member of the Government up to the time when the Excess Profits Levy was absolished. Another Conservative hon. Member, chairman of a company, reported that:
The net profit totalled £306,505 against £145,175 in 1953".
and there is a full description of what is available for distribution, after which it is reported:
This increase is almost wholly due to the cessation of Excess Profits Levy …".
That Conservative was supporting the Government for the abolition of E.P.L. These people did not do so badly. That is the way in which the redistribution of the nation's income has gone on.
I have a whole series of these:
Courtaulds exceed £20 million in profit. Thanks to a cut in the tax bill from nearly £11 million to £8,500,000"—
etc. This is what the Government policy has been—the handing out of largesse in the form of hundreds of millions of pounds to people who do not need it, and, at the same time, urging economy and sacrifices on the workers.
One could go on in this way about our old friend Mr. Gibson Jarvie, chairman of United Dominions Trust Limited—[HON. MEMBERS: "Oh."] Perhaps hon. Members opposite do not like to hear


this, but it may do them good to listen. In the annual report there is a complaint about the crippling burden of taxation, but the report also refers to excess profits for the year, which is a record year. At the same time it talks about
the burden of grandiose social services which, pandering to the shirker and the lazy by shouldering responsibilities which properly belong to the individual, are destroying our very character.
There is also a reference to the necessity for
encouragement and incentive to the wealth-producers … Unions must be put in their place … The Welfare State is a failure: there can be no social quality … the big earner is entitled to his reward. Without him those lower in the scale could not exist.
This is the kind of thing which the workers know about. They are conscious of these things. In the Investors Chronicle City column, and in the newspapers day after day, there are references to the vast profits made out of land speculation and the rest of it. One is left to imagine how this can be reconciled with demands to the workers that there should be a restriction in their wages.
It is interesting to recall the sneers of the Tory Party over and over again in 1951. My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) referred to the comparison between 1951 and 1960. He was generous enough to say that perhaps 1951 was a little too near the war years and he referred to 1955 to give a basis, but the picture was not very much better. The fact is that 1951 was only a few years after the war and things were still extremely difficult. Then, according to the war-time Prime Minister, the right hon. Member for Woodford (Sir W. Churchill), the country was nearly bankrupt. It had sold practically all its foreign assets. Yet in 1951 the Observer was referring to a recent White Paper which had contained some striking facts. It stated:
The first is that our deficit on current account with the outside world as a whole has been reduced during the last two years from £630 million in 1946 to £10 million in the first half of 1949. Secondly, and even more surprising, far from living on our capital, we have again become large-scale investors in the outside world. During the 30 months from January 1, 1947, to July 1, 1949, we invested overseas no less than £468 million …
and so on. In the City news in The Times there was this reference:

But the most momentous change in recorded figures has been a cut of well over 1,000 million dollars a year in the sterling area's dollar imports—and this, since a cut of about 800 million dollars a year would have fully satisfied the undertakings mutually given by the Commonwealth Finance Ministers 14 months ago, must properly be counted to the credit of devaluation.
Lloyds Bank Review told a similar story. This was the situation only a few years after the devastation of war. What is the situation now—how many years after the war? Certainly ten years after a Tory Government were elected.
I wish to make one suggestion. I have already referred to the demand made that there should be no increase in wages without an increase in production, and I think that everyone would agree with that in principle. But the question immediately arises, on what basis do we begin? Who decides that basis? Who, in fact, decides what shall be the wages of the workers? On what formula is it decided that a railway worker should be paid so much, a miner should be paid so much and an engineer so much? Evidently it is not based on the total productivity of industry because that assessment could not apply, for example, to teachers.
If the employer alone—this is the basis on which wages have been decided in the past—decides not to divulge to the employees what is the company's income, and if the test is to be left to the workers, to accept what the employer says or to test what he says by collective bargaining which involves the right to strike—otherwise collective bargaining does not mean anything at all—then strikes are inevitable. So long as we leave the employer to make the decision about what a worker is to be paid it is no use asking the worker not to strike, because he has no other way of testing the ability or the willingness of the employer to pay a reasonable wage.
How, then, are the workers to know what is fair, unless all the cards are placed on the table and an agreement is reached about what is the fairness of the amount to be offered both for wages and salaries and for profits, and so on? It seems to me that there is only one way to ensure that. It is by the establishment of joint wages and profits boards in every industry and in every factory. The boards would consist of representatives of the workers and the employers who would have complete access to all information


regarding the activities of the company and the financial result of its activities, and would agree not only on what should be made available for wages but on the amount to be devoted to profits, to investments, to appreciation and the rest. Unless that is done, we may as well resign ourselves to the fact that there is no alternative to the present system of what is called joint negotiation or collective bargaining, which ends in the possibility of a strike.
This may be regarded as a somewhat revolutionary idea and Liberals may think that it is profit-sharing. But it is something very much more than that. This is not a case of the employer saying to a worker, "We have done well this year so we will give you £10, or a few shares." This is a demand that the workers should have full participation in deciding not the policy of the industry but how the results of its activities should be distributed among all concerned.
I referred earlier to the German experiment which goes very much further. There the workers have an equal right to decide on the form of investment policy. I do not mean the allocation of money to investment but the development of the trading policy, the sales policy and all the rest of it. This idea which I am suggesting does not ask so much. It merely asks that, in order to ensure that the workers have a fair share of what is produced by the common effort within an industry, they should be taken into full consultation and have an equal share in deciding how the profits of the industry should be allocated. It is not quite so revolutionary as all that, because in 1921, as hon. Members may remember, when it was proposed that the railways should be organised on a geographical instead of a longitudinal basis, the Scottish railway companies found that they could not afford to pay national rates if they were left isolated on the basis of a Scottish group. So they approached the unions and an agreement was arrived at that, should this new basis become operative, there would be a reduction in wages of 5 per cent. Fortunately, it did not come about and such a reduction was not necessary. But this idea could be developed and, in fact, replace the present situation and system, or lack of system, under which

the products of industry are distributed to one side only.
It would, of course, mean legislation by the Government. It might be met with resistance from the employers or from the unions. But if they wish to try something effective, something new, in order to solve this problem of wages and profits and to effect a reconciliation of workers in industry with the share they are obtaining from the common effort, I suggest that the Government might try consulting the unions and employers. If they can get agreement they should consider introducing legislation. If not, as I said earlier, they must reconcile themselves to the fact that the distribution of largesse to the wealthy in the population while appealing to the unions to refrain from applications for wage increases, or, if they do make such applications, asking them to refrain from strikes, will continue to be ineffective. In fact, the strike is the only argument, in the last resort, which the trade unions have. Therefore, I ask the Government to look at this kind of proposal, or any others, whatever they are, and not to rely on appeals to industry or to the wealthy people of this country and on threats to the workers, who will not accept them.

6.40 p.m.

Mr. Martin Lindsay: Like other speakers before me, I want to analyse, in a very short speech, the reasons why I think we are in the position in which we are today. I suggest that one of the principal reasons for our being in our present mess is that we do not try to work to any consistent, overriding plan and stick to it—a plan to make the best possible use of our resources. I agree with the right hon. Gentleman the Leader of the Opposition, who opened the debate, that planning has a bad name, but what he did not say was that it was precisely because he and his right hon. and hon. Friends were so bad at it. That is the reason, but it is rather a long time ago.
Every great industry or business and, indeed, all the small ones, has a plan on which it is run, and when any important decision has to be taken, the management ask themselves whether what they are about to do conforms or does not conform to their plan. I suggest that our national plan should be to


improve productivity, to reduce costs, to encourage growth and expand exports. I can put it more simply and say that our plan should be to strengthen our economy, and that no economic decision should be taken without being submitted to this acid test as to whether it would strengthen or weaken our economy.
It is quite obvious that we have not been conducting our affairs in this way. The motor industry has been forced against its better judgment to expand where it is not economic to do so, in spite of the overriding necessity of keeping its costs low in order to remain competitive. This was a clear case of social reasons being given precedence over economic reasons. I think that my right hon. Friend was just a little bit disingenuous when tackled about I.D.C.s by the hon. Member for Nuneaton (Mr. Bowles), when he said that he had a duty under the Act. But who brought in the Bill? It was the Bill that he himself brought in; it was the Bill of his right hon. Friends in the Cabinet. What he has done to the Rover Motor Company in my constituency is to force the firm to run a machine shop in Cardiff to feed a factory on the edge of Birmingham, which no one thinks is economic and which will add, even if only marginally, to the company's difficulties in keeping prices low in order to be able to export. The same criticism applies to the Cunard subsidy, and, for my part, it was only with considerable heart-searching that I did not vote against that Measure, and I am sure that this also applies to many of my hon. Friends. We made our criticisms in private, but we have a right to ask the Government not to strain our loyalties too far.
Exactly the same kind of considerations apply to the way in which we run our fuel and power industries. Surely, it is elementary that we should give industry the cheapest fuel we can, and that when pits are uneconomic, we should close them down. It is not our job to run the coal industry as a kind of welfare organisation, and we should not subsidise those pits that are too expensive to be economic by the low-cost coal from the more efficient pits in the Midlands, giving an old domestic industry the benefit which should be passed on to our exporting industries.

Mr. James Griffiths: I wonder whether the hon. Gentleman protested at the time when coal was brought from abroad and sold to industries in this country, including the motor car industry, at a lower cost than it could be produced here, resulting in a burden being placed on the mining industry. Did the hon. Member protest then?

Mr. Lindsay: The right hon. Gentleman knows just as well as I do what the circumstances were at the time those imports were made.
Again, another matter which is causing me a great deal of anxiety is the very great burden which is to be placed on industry by the new valuation and derating proposals. I wonder whether any estimate has been made of the precise size of this burden. I asked my right hon. Friend the Minister of Housing and Local Government a Question only a few days ago, and the Answer was that it was not possible to compute it. I am very glad that my right hon. Friend is here. I should like to give him an example of this immense burden which we are to put on industry because, as I have said, of social reasons rather than economic ones. He and I visited the steel industry in about 1947, and I myself a fortnight ago visited the same steel company which we visited together then. The management told me that in 1960–61 they paid £474,000 in rates, that in the coming year, because of the new valuation, they will pay £1,058,000. But in 1963, if we still stick to our proposals for the abolition of industrial derating, their rates will rise to £2 million. That is a rise from under £1½ million to over £2 million and, of course, this will become a very big factor in the company's costs.
If we do such foolish things as this, it is very naïve of us to be shocked and surprised when our industrialists, one after the other, tell us that the main reason why they cannot export more is because their costs are too high. One of the biggest factors in costs is wages, and it is well known that, at the present time, industry is facing a number of wage claims which are completely unrealistic. It is very difficult to expect industrialists to hold a firm front against unrealistic wage claims when there is a history of the Government


asking industry to give way in order to avoid a strike, as happened in the case of the engineering industry not so very long ago.
To give another example of the way in which social considerations are put in front of economic ones, there is the repair of rolling stock. There are large companies in this country which have for generations made very substantial contributions to our export earnings by selling rolling stock all round the world. In order to remain competitive in price, they must have at least some of the bread-and-butter business of the repair of rolling stock of British Railways, but, here again, political considerations intervene, and the work is given to the British Railways yards.

Mr. J. Hynd: Nonsense.

Mr. Lindsay: I do not expect everyone to agree with me, but that is what is happening,
My right hon. and learned Friend is to introduce what one imagines will be very stern measures next week. Like my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), I can assure him that he will have the loyal support of hon. Members on this side of the Committee. I think that the Government can be particularly heartened by the staunchness of hon. Members on this side who in the short run have the most to lose by unpopular measures—that is those hon. Members with very small majorities. We all of us look to the Chancellor to introduce—not so much temporary measures to restrict consumption, necessary though these may be—but long-term measures to eradicate our fundamental weaknesses.
One of the reasons why, unlike my hon. Friend the Member for Walsall, South, I am so anxious that we should enter the Common Market is that I want to break open and shake up this cosy little industrial world of ours in which management and labour have for long thought that they have a prescriptive right to make much the same things in much the same way with whatever restrictive practices they please for the very same customers for ever and ever. The sort of industrial world in which I want to live is one in which the great majority of companies will double their

production and profits and the minority, which cannot go the pace, will go bankrupt and release their brains and labour for the others. The nation will greatly gain on balance.
One thing is certain. We cannot go on reinforcing the old, failing industries of coal, shipbuilding, horticulture and so on and cossetting the weaker industries instead of strengthening the strong. Nor can we go on increasing wages, salaries and dividends while productivity remains almost the same.
One of the most agreeable things about being in this place is the pleasure one can take in watching the success of one's hon. Friends. No one has taken a greater pleasure in the last ten years than I have in watching the success of my right hon. and learned Friend the Chancellor. He has said some pretty tough things recently with which I am sure few of us would disagree. I think that he is strongly supported by all hon. Members on this side of the Committee. I feel sure that if any individual Chancellor, given time—and time is important—can pull things round, my right hon. and learned Friend will do so. I ask him to address himself to these long-term weaknesses so that, once and for all, we can get away from this continual situation of alternate booms and slumps. If he succeeds in doing that, he will have the gratitude of us all.

6.55 p.m.

Sir Leslie Plummer: First, I would tell the hon. Member for Solihull (Mr. Lindsay) that I do not think he is in any immediate danger. I think that the possibility of there being an election in the next year or so, if we study the practices this Government have followed in the past, is very remote indeed. The possibility of an election will be delayed until such time as the Prime Minister takes the view that we are climbing out of the slump and he is able to open up a little and to say to the electors once again that they have never had it so good, delying on the short memory of the electorate. So I do not think that the hon. Member should be concerned about his immediate future.
I think that he made a valuable speech, for it was important that at the beginning he should pay regard to the necessity for planning. It was also valuable in that he expressed what I believe to


be what the Tories mean when they talk of "stern and realistic measures" which have to be taken. On of those is to close down uneconomic pits and, to follow what the President of the Board of Trade said earlier, to let the workers go to some other industry. How the miners are to go to another industry and how they are to be housed if they do so, has not been answered either by the hon. Member of the President of the Board of Trade. Nor do I think it has received any attention from the Minister of Housing and Local Government.
I do not propose to follow that line. On the invitation of the President of the Board of Trade, who said that he was always interested to hear from people who were trying to export abroad what their experiences were, I propose to relate some of the experiences I had when I went to Czechoslovakia, Hungary, Poland and Roumania with an ex-Member of this House, Lord Boothby. One of the things I noticed about those countries—I am not now criticising or applauding their social system—was a sense of purpose, a sense of determination and a planned effort being made by their Governments and their Ministers which was in sharp contrast to the vague stuff we had from the President of the Board of Trade today.
Those countries at least faced their mistakes—indeed, they buried some of their mistakes—but the President of the Board of Trade was giving us an indication this afternoon that, in his view, things were not so bad and at any rate we would climb out of our difficulties. The trouble with us today is that, unlike the countries I visited, we are bothered by a great number of irrelevancies which are impeding our proper application to the problems which face us. Our record of industrial production compared with those countries is a poor one.
The industrial growth in Czechoslovakia last year was 10·8 per cent.—five times that of this country. Last year Czechoslovakian trade with this country was £20 million in imports and exports as against £46 million with West Germany. We asked the people in those countries, "Do you like dealing with West Germany?" Most of those to whom we spoke made it quite clear that they did not love the Germans—for good reasons

which it is not necessary for me to repeat today—but they said that the West Germans had certain advantages of language, of proximity, of general familiarity and of credit, although they said that the French with their planned economy were now offering credit terms to them which were the best they could find. They said that they were dealing with the Germans to this extent because the Germans were showing immense sales aggression. I shall come back to that problem.
Hungary's trade with Britain in 1960 was £8½ million while with Western Germany it was £34½ million. We should remember that we are constantly told—I think the President of the Board of Trade repeated the argument this afternoon—that when we are dealing with these countries it is important to have a favourable balance of trade, or at least that our trade should balance. Last year West Germany imported £15 million worth of goods from Hungary and sold £19 million worth of goods to Hungary. The West Germans do not take the view that their trade necessarily must balance. If I may borrow a phrase from my right hon. Friend the Member for Huyton (Mr. H. Wilson), the trade league table for Hungary is in this order: Germany, Italy, France, Benelux and Great Britain.
There is a similar situation in Roumania—£8 million of trade with Great Britain and £28 million with West Germany. The new trade agreements for Roumania for 1961 are as follows: West Germany, 98 million dollars; Italy, 88 million dollars; France, 50 million dollars; Austria, 40 million dollars; and Great Britain, 23 million dollars.
Why are we content that our industrial competitors should have these advantages over us in those countries? Everything that those countries buy from West Germany can be bought from this country. They want many of the things which we make. In Roumania they told us that what they wanted, in particular, was Leyland trucks. They do not want to buy trucks from Krupp or from the Fiat works, and they do not even want to buy French trucks, although the credit terms are attractive. They want heavy-duty Leyland lorries to work in the oilfields, but they say


that the trading conditions laid down by the Board of Trade, on the basis of barter, which seems to be so popular with the Board of Trade, make it impossible for them to get those trucks. They want technical assistance and "know-show".
With Poland, with whom our trade is slightly less than that of Western Germany, we have an adverse balance of £22 million a year while the Germans have a favourable balance of £1 million a year. I understand the reasons. We import a lot of foodstuffs from Poland and, as a result, the Poles spend money on our manufactured goods. We might do the same for the Hungarians. They want their quota of bacon, now about 2,000 tons a year, doubled to 4,000 tons a year. As a pig producer I do not like to see any foreign bacon being imported into Britain, but all they are asking is to provide another day's supply for this country. It would give them £500,000 a year more to spend on manufactured goods. If it is all right for us to trade with the Danes, and if it is reasonable out of a market of 600,000 tons a year—which is the size of the bacon market—for us to give 48,500 tons to the Poles, surely it is reasonable in the interests of increasing East-West trade to meet the Hungarians' request.
I wish that a Minister from the Ministry of Agriculture were present to deal with the next point. I was interested in the demand in those countries for British livestock. I went with the chairman of the British Friesian Society and the secretary of the Aberdeen Angus Society to Leipzig, and we saw the animals at the Leipzig agricultural fair. We were asked what we would do with them, and we said that we should shoot the lot. They are no good. These countries want British livestock. We are the producers of the best livestock to be found in the world. They need beef cattle, they need pigs, and they need sheep. They need a whole variety of the goods which we could supply to them, but they need them on fairly long credit terms. It is important that this potentially great industry should be encouraged.
We are still suffering from the nonsense of the embargoes which have been placed on our trade. I notice that the Financial Secretary to the Treasury laughs when I say that Perhaps he will laugh at my next remark. We decided

that we would not sell ball-bearings to Czechoslovakia and Hungary; we would sell them goods which contained ball-bearings but we were not permitted to sell them ball-bearings separately, so they set up their own ball-bearings factory. There are now two such factories, one in Czechoslovakia and one in Hungary, competing with our ball-bearings manufacturers on the world market. This was a piece of nonsense. We do not want as many ball-bearing factories as there are in the world today, and because of this embargo we threw away a golden opportunity of establishing for ourselves an export market.
Hon. Members will recall that in 1954 we could have been supplying the Soviet Union with ships but for the fact that we said that we could not supply them with ships which went faster than 10½ knots and which had a greater capacity than that which we laid down as being reasonable. These mistakes are being repeated today.
I ask the Minister to confirm or deny a statement made to me that one of the inhibiting factors in trade is that there are 300 items still on the embargo list, many of them on a security embargo list which is known neither to manufacturers here nor to the people abroad who want to buy goods from us. We were told in Czechoslovakia that over and over again contracts are signed for goods which are then the subject of an embargo before they can even be sent from this country.
The Committee should make no mistake about this: the Germans understand it. The German intelligence is first-class. Not a British businessman goes into one of those countries who is not followed around or does not find a West German rival on the spot with him almost as soon as he arrives or the very next day. The Germans have a brilliant intelligence service, and they are trying to get business away from us. Last year there were 4,000 German businessmen in Hungary trying to sell German goods and there were 270 British businessmen—270 British against 4,000 Germans.
I was given an example of the experience which they have in Hungary. They told me that they telephoned a Dusseldorf factory, said that they were interested in some pumps and asked for a catalogue giving price and delivery


dates. The next morning an aeroplane landed at Budapest and out of it stepped three or four pump experts, with catalogues printed so that the Hungarians could read them, and accompanied by a young lady who had been busy on the flight typing out draft contracts. The details and the offers were provided.
The Hungarians telephoned England and asked a firm, "Are you interested? Can you send a catalogue?" They were told, "I am sorry, but our catalogues are out of print and will not be ready until November". This was a specific case. The English firm added, "We cannot send anybody out to Hungary because we do not have a board meeting until the end of the month. In any case, our Mr. Black who deals with Hungary is fishing in Scotland".

Mr. Harold Davies: Or having dinners.

Sir L. Plummer: This is not salesmanship. It is waiting for the customer to knock on the door. When Lord Boothby was in Poznan a representative arrived from Krupps in his own private aeroplane. He had conversations with Mr. Cuchin, the Minister for Foreign Trade, privately, and within an hour or so he had signed a contract for £2 million of goods. He said, "I know you will be worried about the fact that prices have altered as a result of the revaluation of the mark. Do not worry. We will do business with you on the basis of the old mark." This is the aggressiveness in selling that the Germans have, and this is the ability of their people to do business.
I think that the opportunity that presents itself to this country is in the supply of intermediate goods. There is in my constituency a famous engineering firm called Stones, of Deptford, which among other things makes air-conditioning plants. It is supplying Hungary with air-conditioning plants which the Hungarians are putting into the trains that they are building, and selling to India. The Hungarians say, "We are able to sell these trains for rupees. We can convert that money into sterling, and are thereby able to buy more than the intrinsic value of the thing we import from Britain truly represents."
The Soviet bloc countries are eager for British diesels. At the Brussels Motor

Show there was a six-seater Volga, a Russian car, with a British diesel engine made by Perkins, and it was the success of the show. Soon, either Marconi or General Electric will get a contract for the supply of television control boards for the package-deal television stations which the Roumanians are selling all over the Eastern countries.
My right hon. Friend the Leader of the Opposition referred to professionalism in selling. First of all, we have to learn that exporting is not fun. The Minister who perpetrated that bromide—[HON. MEMBERS: "The Prime Minister."]—has done a great deal of harm to industry. I hear that it was the Prime Minister, but I am told that it was in the hand-out of his speech but that he did not actually utter the words.
Exporting is not fun; it is very hard work. One has to leave one's home, travel to and in a foreign country, and stay, as often as not, in indifferent hotels. One has endless frustration, and appallingly boring waits, and great argument. Exporting is very hard work, and to treat it as though it were a day out—as though a man goes exporting as another man goes shooting, hunting and fishing, drinking old port and eating over-ripe pheasant—is nonsense. Exporting is hard work. That is what the Germans understand. It is what our salesmen understand, too, but it is not so much understood by our boards of directors. In fact, I sometimes think that we should be better off to destroy our boards of directors and let the sales managers take over on their own.
It was a member of the Government who said a little while ago, when we were arguing about the exporting difficulties, "You don't have to go out and sell. You can always sell through the post." That has done almost as much damage as has the other statement that exporting is fun.
I.C.I. is a shining example of what can be done, and Mr. Chambers, the chairman of that organisation who so proudly referred the other day to the firm's considerable sales to the Eastern countries, shows the smaller and medium-sized firms what can be done by vigorous salesmanship.
We also need to wind up the Allied Travel Permit Bureau in Berlin, which decides whether or not East German


business men can come to this country. It is not good enough that our people should give a visa for an East German business man to come to this country, and for the Americans or the French then to decide that he cannot have a visa, upon which the man then goes to Western Germany or to France and places his orders.
Let us make no mistake about it. There is a rising standard of living in the Socialist countries, and a rising demand for the things we make—capital goods as well as consumer goods. We must not plan our exports just from year to year—although I would even enjoy the prospect if we did as much as that. Sometimes I think that we do it just from day to day.
We ought to be planning our exports over a four-year period—a four-year plan. We should match the four-year plans of the Socialist countries with our own. We should say, "These are the goods we want exported over the next four years." It is very important, too, that those countries should understand what it is that we want to export, because when they are drawing up their plans for importing our goods they want to co-ordinate their own plans and desires with the things we want to sell. We should indicate to our manufacturers what we regard as the priority exports. We should encourage our exporters, we should encourage our young men to sell on the basis that they are doing great things for their firms and for their country.
We should be encouraging the consortia. A consortium is at present building an £8 million tyre factory in Roumania. There are possibilities of countries behind the Iron Curtain getting together to employ consortia from this country. These are the ways in which exports can be achieved. They cannot be achieved by exhortation. This job can be done only by planning and by applying ourselves intelligently to this problem, which looks as though it is defeating this Government.

7.16 p.m.

Mr. Maurice Macmillan: I hope that the hon. Member for Deptford (Sir L. Plummer) will forgive me if I do not follow him behind the Iron Curtain; nor will I take up with the hon. Member for Sheffield, Attercliffe

(Mr. J. Hynd) his mention of the war, though if I remember rightly there was during the war an ingenious method by which staff officers who were engaged in planning the invasion could communicate with one another about the extent of their secret knowledge without necessarily repeating it to all and sundry by the specialist use of the word "Bigoted", which indicated their possession of secrets of the invasion of Europe.
This debate is suffering through being bigoted in both senses of the word. The Government alone are in possession of the knowledge that makes it relevant, but they cannot use it. And rather too many hon. Gentlemen opposite are following the predictable and rather unprofitable line of their own prejudices.
I should like, with respect, to congratulate the Leader of the Opposition on what was, I thought, an admirable and quite uncontradictable analysis of the economic difficulties in which we find ourselves today. I only wish that I could congratulate him on the remedies he hinted at rather than proposed. It is, perhaps, a melancholy reflection that if the fortunes of the two parties had gone in the opposite direction at the last election we should be attacking a Socialist Government for the failure of the old Socialist ideas to restore the same sort of situation; but one must admit that the old Conservative ideas have not been 100 per cent. successful.
The attack that has developed from the benches opposite is, perhaps, not really consistent. Some hon. Members are very opposed to private enterprise; others appear to favour its operation, at least in France and Germany. I would point out to the right hon. Gentleman that France is still living on the last of a series of devaluations—an example that I do not think he would recommend us to follow—and that the German balance of payments surplus—I speak here from memory—is this year very roughly the same amount as Anglo-American expenditure in that country.
If we are to talk about the effect these economies have had socially, as the hon. Member for Attercliffe did, it is surely one of the stronger arguments of those trade unionists who are opposed to our entering the Common Market that they are frightened that the Franco-German


attitude of the "patronat" to the work-people will be exported to our employers. Surely we should look at some of the countries which have been so praised today: Italy, with its successful clothing competition with this country, its 53 per cent. growth since 1953, and its average unemployment from 1954 to 1960 of 9·2 per cent. Hon Members may also wish to look again at the German figures—the average unemployment for that period was 3·8 per cent.
It is a pity that so much of the criticism from hon. Gentlemen opposite—not all, but so much of it—is wasted because it is irrelevant to today's situation. In fact, comparing, for example, the speeches of the hon. Gentleman the Member for Attercliffe and the hon. Gentleman the Member for Grimsby (Mr. Crosland), I would have said that their relevance was an inverse ratio to their political content. That is clearly demonstrated in the attitude both of some hon. Members opposite and some of my hon. Friends to the Common Market. They are dealing with a world which no longer exists except in their imaginations.
The past to which the extreme Right is harking back is not the same past to that which the extreme Left is returning. They are both equally irrelevant today, and I am only sorry that so many of my colleagues on both sides of the Committee have so little confidence in the future of this country and its capacity to compete that they are frightened of entry on suitable terms into the Common Market. As my right hon. Friend the Member for Flint, West (Mr. Birch) has said, the scale has changed. It is no good trying to maintain the old illusion by peering down the wrong end of an economic telescope. We must change, too, and it is not enough in any operation merely to put the right tool to the machine; the work too must be set right in the machine.
It is time that we stopped using such words as "planning", "regulators" and "anti-cyclic devices" as sort of incantations—thinking that they themselves will solve the problem. The hon. Gentleman the Member for Deptford referred to the four-year planning of exports. How can we plan markets to that extent without adopting the same sort of control

over our industry as those to whom we are planning' to sell? What about the opinions of the experts? Are they always right? Were they right when they universally and unanimously forecast a world shortage of oil not so long ago?
I do not think that we can really do any good until industry, the Government and the people as a whole seek the reality that underlies all these phrases. I do not think that in the short-term is the real danger or the true reality. This is not a crisis in the sense that the Berlin issue could be said to be a crisis; nor is it a crisis reached in an illness which can and must be overcome. It is rather a recurring symptom, and successive Socialist and Conservative Governments have not yet found the right method of curing the disease itself. They have tried, and they are still trying, to deal with the symptoms, but I hope that next week they will deal with the disease itself.
The extent to which our overseas commitments depend on borrowing has already been mentioned, which is one of the reasons why we in this country tend partly to talk ourselves into economic difficulties. It means that if our measures are to be effective they must be seen and seem to be effective to those through whom we are seeking to overcome the short-term difficulties by borrowing in the short run. That obvious effectiveness inevitably involves restriction, and it is no good hon. Gentlemen opposite trying to pretend that their proposals are less restrictive than those which they are trying to put into the mouth or mind of the Chancellor of the Exchequer. Certainly import quotas are as protectionist and restrictive of competition as any other measure. Planning can be effective if properly done, but it can also mean planning the protection of inefficient industry. Co-ordination helps, but it can also be wrong if it means that a section of a nationalised industry is organised to carry the losses which should not be carried by any part of the nationalised system but should be eliminated.
I do not think the hon. Gentleman the Member for Grimsby is right in saying that we shall have to sacrifice any principles on this side of the Committee in order to return to the sort of planning that I think the hon. Gentleman wants.


It is more a question of returning to the principles that were, perhaps, exemplified in some of the Prime Minister's earlier writing and thinking.
We all know the answer to this problem, but the difficulty is to achieve it. We all know that we must improve exports, carry out our overseas commitments, pay the import bill at home, and so on. That is a problem which has not really yet been solved, and a "moderate" solution is genuinely difficult. The Socialists ideas do not have any chance of succeeding because they involve being too extreme politically in order to be effective economically.
The economic success of the sort of measures proposed by hon. Gentlemen opposite requires greater control and unfairness to individual liberty for people to tolerate. On this side we have rejected—and rightly—the more extreme discipline of laissez faire liberalism, despite some muttered charges to that effect from below the Gangway when one of my hon. Friends was speaking earlier. The difficulty is similar to one we are facing in another field, that of crime, where if punishment is to be an effective deterrent it must be more savage than our society will tolerate. In order to make effective such economic sanctions there is a danger of risking economically measures and disciplines which we are not willing to tolerate socially.
No appeal for discipline will be effective, nor for self-restraint. Even in the public sector the Chancellor's measures will not be effective unless they are compltely comprehensive. It is no good thinking that one can put a wage freeze on the public sector and do nothing about the private one. That will merely lead to a movement of labour into the private sector. We must be prepared to take other measures and face, if necessary, a high Bank Rate and a credit squeeze, but at the same time, I beg the Chancellor to watch the position of the exporter who is in the process of expanding his concern at the express wish of the Chancellor.

Mr. Harold Lever: On the question of credit squeezes and higher Bank Rates, which have been shown with use to have had a singular lack of success, what will be their advantage in the present difficulties?

Mr. Macmillan: The point I was trying to make is that if the Chancellor directly freezes wages in the public sector and does not take steps to prevent the private sector being able to pay higher wages, the private sector will entice labour away from the public sector and my right hon. and learned Friend will have achieved nothing.
There a-re several other measures which must be taken together, but I do not think that any of them will by themselves be successful. One of the things which I hope can be achieved is an increase in competition by the lowering of tariffs, for I do not believe that merely the threat to do that is adequate. Exhortation is useless. It is no good appealing for wage restraint. It has nothing to do with the social policies of the Chancellor, and hon. Gentlemen opposite had no greater success in appealing for wage restraint either. It is not a question of comparing what goes on in Germany or elsewhere. Employers will continue to pay higher wages so long as they are able to sell their goods successfully; and so long as employers are selling their goods successfully and at a profit the unions and the employees will rightly continue to press for a higher share of these profits. The function of the Chancellor is to create a situation in which it is impossible for private persons to achieve either a higher profit margin or a higher wage rate than can be tolerated by the national economy; a situation where the true effects of economic conditions are spread not equally but equitably throughout the country.
Any measures which restrict demand may well tend to cause more wage claims. That is why they must be coupled with measures which make such a rise in money incomes impossible. Of course, they must include measures for improving production. The permanency of any improvement depends on our willingness in the end to stop the protection of inefficient industry and the tolerance of restrictive practices on all sides of industry, from management and men alike, and to stop also any hidden subsidies which may be contained in the methods of running our nationalised industries.
It is necessary that the Government should stop trying to protect the whole of our industrial complex and all our


economy, and should try instead to foster the successful, protect the weak individual where necessary and help in the adjustment of all to the real economic situation. This principle seems to have been accepted by the Government in the Cotton Act. Whether we think it was successful or not is another matter, but it was an attempt to help the cotton industry adjust itself to the situation which was created by the Government's refusal to limit imports from Hong Kong and impose protective tariffs. It is on these lines that permanent action in the future must be taken. To do this successfully requires a more detailed examination of each industry one at a time. I still think that it requires the co-operation of all concerned, and perhaps if the Chancellor's medicine next week is nasty enough we shall get a greater degree of co-operation than before. It is now not so much a question of blame for the past, but how quickly we can adjust a rather complex mechanism to a rapidly changing situation.
Personally, I think the situation requires a much more radical approach to many other methods which we now take for granted, including taxation and the financing of the Welfare State. Certainly it cannot be done immediately, or by the Government alone. If there is any blame to be attached, it is surely to be attached to all of us alike, but it is to the Chancellor that we look next week to bring this fact home to the nation. I believe that whatever criticisms there may have been in the past from these benches, if his action is strong and looks like being effective, he can rely on our support next week.

7.34 p.m.

Mr. Charles Grey: I hope that the hon. Member for Halifax (Mr. Maurice Macmillan) will forgive me if I do not follow him in what he said, though I cannot help commenting that when the Prime Minister reads the hon. Gentleman's speech I do not think he will be very pleased by the compliments which the hon. Gentleman paid to my right hon. Friend the Leader of the Opposition.
I should like to reduce the tone of the debate and talk about affairs as they affect the north-east region. I do so because, time and again, hon. Members

on both sides of the Committee who represent north-east constituencies have been trying to get information from the President of the Board of Trade about unemployment, migration and establishing industry in that area. Despite the fact that the President of the Board of Trade has been questioned on numerous occasions, he has failed to give any satisfaction. For that reason, I am glad to be able to state these local points.
This matter of migration is one of great concern to us all, because of iris great shift of population and industry during the past ten years from the North-East to the southern parts of the country. I should be the first to agree that this problem is not new. Indeed, a friend of mine reminded me the other day that about 350 years ago King James I was concerned at the growth of London at the expense of other places, and he issued a Proclamation, from which I will quote an extract.
The other good Townes and Borrowes of his kingdom, by reason of so great receit for people in and about the said City, are much unpeopled and in their trading and otherwise decayed.
I am not suggesting that the circumstances of today are anything like what they were then, but the words in the Proclamation have a familiar ring, and I believe that the difference between the two periods is only one of degree.
Today there is this drift of population from the North-East on a scale which, if unchecked, will create problems that it will be impossible to solve. Our anxiety is that the Minister does not appreciate the gravity of the situation. Obviously he will tell us that he does, but what he has to do is to prove that he is trying to come to grips with the situation, because so far he seems to have done nothing at all. Therefore, he will get no peace from this side of the Committee until he strikes at the core of the problem instead of dishing out one or two palliatives in the hope that we shall be satisfied. The only thing for which we in the North-East ask is to be put on level terms with the rest of the country instead of having to carry a burden of unemployment which is always twice the national average.
I wish to refer to something that I said to the President of the Board of Trade last week in a supplementary question. My condemnation is not that


the Government have done nothing, but that I do not believe—and neither do my hon. Friends—that the President of the Board of Trade has done sufficient. How he can be complacent about the present situation is beyond understanding. I have come to the conclusion that he is so out of touch that it is my duty to enlighten him and the Committee about our present state of affairs.
I take, first, migration and the President of the Board of Trade's responsibility in that matter. The preliminary report on the 1961 Census revealed a shift of population and industry away from the North to the southern counties. Many northern cities, including Newcastle, Darlington, Gateshead and York, have lost population. For instance, Newcastle had a population of 291,724 ten years ago. It has fallen to 269,389 today, a reduction of 22,335 in ten years. Gateshead has been losing population ever since 1931. In the last ten years, it lost another 12,000. I could give more facts, and they cannot be refuted.
I am convinced that this migration has been caused by a lack of suitable jobs in the area, and it is in that sense that I say that the President of the Board of Trade is responsible. Hon. Members on both sides know of the continuing contraction in the coal-mining, shipbuilding and ship-repairing industries. This is a matter of great concern, all the more so when we realise that sufficient is not being done by the President the the Board of Trade to bring the right kind of industries into the area to offset the full effects of the contraction.
The President of the Board of Trade has given us some assurances. He told me on 4th July that there were 21,000 jobs in prospect. That sounds all right when it is said quickly, but I heave some questions to put. I hope that my questions will be conveyed to the right hon. Gentleman. I want him to be more precise and definite. The more definite he is, the more content shall we feel with his reply.
May we be told how certain the right hon. Gentleman is about these 21,000 jobs? Nothing would be of greater benefit to the North-East than certainty about future jobs. Nothing could do more to remove from the minds of people there their persistent doubts and fears about future employment. Secondly,

what sort of time has the President of the Board of Trade in mind for these 21,000 jobs? How long will they take to materialise—one year, two years, three years or what number of years? Thirdly, may we be given a breakdown of the occupational groups represented by the 21,000 jobs?
I asked this question last week, but did not receive a reply. I hope that the President of the Board of Trade has done a little homework and is now prepared to give a reply. If he cannot reply now, perhaps he will send me a letter giving the information. I should be quite satisfied with that. We want to know definitely the kind of jobs he has in mind.
I believe that the type of job available has a very great influence in people's minds when they consider whether they are prepared to live their lives in certain areas. The widening of what I call job opportunity would give the North-East the confidence it needs and would demonstrate to all that it is as good a place as, if not a better place than, anywhere in the world in which to work and live, and that it can play a very important part in strengthening our country's economy.
Perhaps the Minister will agree with what I have just said, and perhaps he will go on to say that his Department has been successful during the past three-and-a-half years. Perhaps he will say that unemployment is lower now than it has been since 1957. That is quite true, but, if he tells me that, I will give him my reply at once. The simple fact is that unemployment in our area is still twice the national average. At any rate, how big is his success when we take into account that unemployment in the North-East is only what it is because people have moved away in order to seek jobs elsewhere? The Government can claim no credit whatever for the position as it is now. The drift of population continues, and that is one of the reasons why the level of unemployment is what it is.
A very significant feature of the drift is that, while it has continued during the last ten years at the rate I have indicated, half the people who have gone have been under 35 years of age. This is extremely serious, and the Government collectively stand condemned for it.
The President of the Board of Trade told us that migration was not his problem. That may be so. I concede it. But, even though the right hon. Gentleman may have no responsibility for migration, he definitely holds the key to the solution of the problem. We want the right kind of jobs. We want industries in which our people can use and develop their skills. Only the President of the Board of Trade is responsible for that kind of activity.
I know that it is entirely out of line with the rest of the debate to raise this next point, but I feel that I must put it because this is the only chance I have to bring it to the attention of right hon. and hon. Members in this context. I refer to the possibility of our having a Government Department in Durham. I have been concerned about this for some time and I have asked many questions about it. I have raised it on three occasions in previous debates, and I have met the Financial Secretary to the Treasury about it. Will the President of the Board of Trade do his best to get the promised Government Department? The right hon. Gentleman must realise how important this is for him, because it would help to cure some of our unemployment. The Committee will know that we were promised a Department in 1948. It is now 1961, and we have not gat it yet. That is a long time to wait.
The President of the Board of Trade could do a good job for us and for himself. He and the Chancellor of the Exchequer and the Financial Secretary could have a conference about it. I am sure that the President of the Board of Trade has the charm, persuasive demeanour and all the characteristics necessary to put across to the Chancellor of the Exchequer how valuable a Government Department would be for Durham. It would help to cure a great deal of unemployment among our young people and it would provide jobs of a kind suitable for them. I repeat my request that the President of the Board of Trade should press the matter upon his Treasury colleagues in the knowledge that, in bringing a Government Department to Durham, he would make a tremendous contribution towards solving the unemployment problems of the area.
It is quite obvious to everyone that this debate would not have taken place were it not for the fact that we are about to have another dose of Tory austerity. For ten consecutive years now, we have had many a dose of Tory austerity dished out. What the Chancellor of the Exchequer will announce next week I do not know, but he will, no doubt, rap the knuckles of industrialists, trade unionists and ordinary people. At least, that is what we are led to expect.
Increased Purchase Tax, a credit squeeze or even a payroll tax would be bad for any area, but for the North-East and Northern Ireland any one of them would be disastrous. While the President of the Board of Trade is discussing the question of the Government Department which I have suggested, he might also have discussions about insulating the North-East and Northern Ireland from the full effect of these deadly economic instruments. The implementation of any of them would mean further unemployment and hardship.
As I have said, the Government have been in power for ten consecutive years. All the austerity plans which they have dished out have come at convenient times for them. Do not let us say that the Tories cannot plan. We are told that they are the best planners in the world. This is the best plan of all. All the restrictions which they callously impose after elections are taken off at a convenient time when another election is on the horizon. I wonder when the Tories will stop doing everything for Tory Party political ends and will think for a change about the nation's well-being. I do not believe that it is right for the people of this country to be used as pawns in the political game and as an instrument for getting the Tory Party back to power. To give something before an election and to take it away just after is wrong in principle. It is also immoral. I believe that, if the Tories acknowledged the truth of what I have said, they would realise that Tory freedom does not work.

7.52 p.m.

Mr. Charles Curran: I congratulate the hon. Member for Durham (Mr. Grey) on making a very persuasive plea for the North-East Coast. He has given the Government a good deal of advice about Durham. I also wish to give the Government a good deal of


advice, not about Durham but about other parts of the country.
I agree with every hon. Member who has spoken that this is no time for exhortations. Whatever else the Chancellor of the Exchequer may do next week, I hope that he will not make any appeals. This country is saturated with appeals. It has gone punch-drunk from appeals. We have been having them for the best part of twenty years. I do not think there have ever been so many appeals in this country as there have been in the last twenty years since the days of Dr. Barnardo. I do not believe that Barnardo-type policies in this crisis are any good.
Equally, I do not believe that it is the smallest use for the Government to make any appeal for wage restraint unless they face the present facts about England. I invite the Government to face what I believe are the facts of public opinion. I do not say that I necessarily approve of these facts. We may like or dislike them, but facts I believe they are with which we have to reckon.
We are all familiar with the argument that in comparing wages with dividends we are comparing things which are not really comparable. For instance, we are familiar with the argument that to advocate a tax on capital gains is to ignore the facts about capital gains. We are familiar with the argument—the Chancellor and all of us on this side of the Committee have used it—that to urge a tax on capital gains does not make sense because the Radcliffe Commission investigated the matter, and the majority Report of that Commission demonstrated that a capital gains tax is probably not worth powder and shot.

Mr. William Hamilton: A Royal Commission also referred to the incentives or otherwise of eliminating or reducing taxation on Surtax payers.

Mr. Curran: I agree. I do not believe that we can usefully discuss the question of a capital gains tax or of similar legislation against the minority simply by reference to the measured facts. We must take into account not only the facts but the climate of public opinion about them.
I invite the Committee to agree with me that, when the ordinary worker is invited to believe that a capital gains

tax is not worth powder and shot because of the demonstration given in the Radcliffe Report, rightly or wrongly, he says, "I am not interested in that. What I am interested in is the fact that a small number of rich people are getting away with it. You can prove to me as conclusively as you like that to put a tax on the small number of people who engage in capital transactions will cause a great deal of trouble and will not produce anything like enough money to make it worth while in quantitative terms." Rightly or wrongly, he scouts that argument and any similar argument as irrelevant.
When the Chancellor of the Exchequer comes to consider a tax on capital gains, cracking down on expense accounts and the small number of people in this country who make money out of speculation, he is in much the same position as the Home Secretary. The Home Secretary is faced with a demand for the restoration of corporal punishment. I am completely and flatly opposed to the restoration of flogging. Nothing will ever lead me to vote in the House of Commons in favour of bringing back the lash. But, in saying that, I recognise that I belong to a small and eccentric minority. I believe that the great majority of people in this country—this has certainly been my experience when I have become controversial about this matter—brush aside as irrelevant any argument that to bring back the lash would diminish the quantity of violent crime. They are not interested in that. They wish to bring back the lash in order not to diminish violent crime but to punish the thugs. They want to take the hide off the thugs.
When people in this country—and there are many of them—want penal legislation to be imposed on the small minority which makes money out of speculation and capital gains, they are not to be shaken by any argument that such legislation would be more trouble than it was worth. They are in exactly the same position as those who want the restoration of flogging: they want to take the hide off the speculators. It does not matter to them one scrap whether the process will produce a sizeable sum of money or not.
I believe that for the last few years the Tory Party has been in the grip of what has been called the intellectualist fallacy.


It tends to argue that if we can show that the arguments in favour of one course are not as good as the arguments against it in quantitative terms, then that is the end of the matter. I believe that the Tory Party has dismissed proposals for a capital gains tax by saying that the facts show that such a tax would not be worth while. Similarly we have tended to dismiss the argument that we should penalise people who wassail on expense accounts and people who make money out of speculation on the ground that, in order to catch such people, we should have to set up a great deal of very complicated administrative machinery, that that would be a very difficult thing to do and that, when we had done it, the net yield would be trifling in quantitative terms.
That approach takes no account of the state of mass opinion in this country. As far as I can measure it, what mass opinion in this country wants, independent of any quantitative arguments, is to impose penal sacrifices on the wicked rich. It will not be shaken by any assertions, however convincing they may be in a logical sense, that such legislation would not be worth while in terms of cash.
I believe that this is a fact about this country. I shall not speculate at length about why it is that in this country, unlike the United States, there should be, as undoubtedly there is, this fierce popular hatred of people who make money out of speculation, who make money out of being smarter than other people. Nobody can dispute that in this country there is this hostility, with which the Government must reckon.

Mr. John Hall: Do I understand my hon. Friend to be saying that if a majority demands a certain course of action, even though the Government—and, indeed, my hon. Friend himself—think that that demand is wrongly based, the Government should give way to it? Does he, for example, believe that if the majority demanded the reintroduction of the birch or of flogging, the Government should give way because that is a majority demand?

Mr. Curran: I cannot answer except for myself. If I believed that a certain policy did not make sense, I would decline to vote for it, whether it was a question of flogging or of taxing capital

gains. The Government, however, must consider not simply what individuals think but the climate of opinion.

Sir W. Robson Brown: They should consider not merely what they think but how they act.

Mr. Curran: It is no use disputing that mass opinion today is not prepared to accept wage restraint unless it sees comparable sacrifices imposed upon the minority. To tell the masses that the imposition of these sacrifices will not be in measurable terms of any importance is to say something Which, however true it may be, is entirely irrelevant.
I suggest that this is a fact about this country with which we must reckon. It is one of the ways in Which this country is very different from the English-speaking communities on the other side of the Atlantic. Across the Atlantic, there is nothing like the same sort of envy of the small number of people who become rich as there is in this country. It is not relevant to this debate to go at any length into the reasons for that, although I was interested in part of the speech of he hon. Member for Grimsby (Mr. Crosland). He quoted the cases of Holland and Sweden and talked about the difference in the social climate of those countries. It was an interesting speculation. I wish that the hon. Member had developed it. I suggest that it can be developed when England is contrasted not with Holland or Sweden but with the United States.
In the United States there is nothing like the same mass hostility to a small number of people having a lot of money that there is in this country. Part of the answer is that, to a great extent, mass opinion here has never accepted the values of capitalism. It has never accepted the values of the commercial society or the notion that in a good society people strive off their own bat to improve their lot. Masses of people believe that the process of lifting their standard of living should be not an individual but a collective effort. It is a process which was summed up very well not by an Englishman but by an American, Gene Debs, the American labour leader, who said, "I do not want to rise from the masses. I want to rise with the masses."
That point of view is characteristic of great numbers of our working-class


people. They look with hostility upon the commercial values and upon a society where some people make money by being cleverer, quicker or better speculators than ethers. We have this climate of hostility among the organised workers that the Government must reckon with.
Without developing any further the contrast between England and America, the contrast could be illuminated by one example only, and that is a verbal example. In the United States, it is a compliment to say about a man that he is a smart man. In this country it is the very reverse of a compliment. Here we do not regard smartness or commercial skill in money making as something which is socially commendable. By "we", I refer to the mass of the population. In the United States it is quite different. Only last week the biggest trade union of America, the Teamsters, held its annual convention at Miami in gaudy luxury. When I read the accounts of the teamsters' convention in Miami and compared it with trade union conferences which I have seen in this country, I was dazzled by the difference. I dare say that a good many Labour Members of Parliament were equally dazzled.
That union, which is roughly the equivalent of the Transport and General Workers' Union in this country, met last week and voted its general secretary, who is the equivalent of Mr. Cousins, an increase in salary which now gives him 75,000 dollars a year—£25,000 a year for running this union, plus what was described in the reports as an unlimited expense account.

Mr. Harold Davies: For God's sake, do not compare American unions with ours.

Mr. Curran: On the contrary, I was pointing out the contrast between one of our unions and organised labour in America, if the Teamsters' Union is a fair sample, as I think it is. [HON. MEMBERS: "No."] I am not arguing that it is necessarily an admirable body. I am saying that it is a good, powerful and rich trade union. The climate of opinion in that union, so far from being hostile to money making, is entirely in favour of it. I use that simply as an illustration to show the difference, as I think there is, between the climate of

opinion among the organised workers in this country and on the other side of the Atlantic.
I believe also—and this, again, the Government must take into account—that a deep mark has been left on the British people by the fact that from 1940 to 1950 we lived under what was really a siege economy. For a whole decade we lived in a society where goods and services were distributed roughly without much regard to individual effort. They were distributed roughly on the basis not of personal striving but of personal needs. That siege economy has left us its enduring mark upon the climate of opinion in England. It is something which will shape our politics in the 1960s and later still.
For these reasons, I suggest that when the Government are considering the economic decisions which they have to announce next week they must take into account, whether they like it or not, the fact that mass opinion will not accept limitations upon wages unless it observes penal sacrifices being imposed on the minority at the same time. It is demanding the equivalent of human sacrifices.
Let me illustrate this further. I believe that if the Chancellor wants to get mass assent to wage restraint he must crack down upon the plutocracy. Whether he does it by means of a capital gains tax, by tackling expense accounts or by tackling the speculators in some other way, I do not know; but he must do this not in the least for economic reasons. He must do it for psychological reasons.

Mr. Harold Davies: For moral reasons.

Mr. Curran: No. I prefer to use the word "psychological". This is a matter not of economics but of morbid psychology. I do not share this disapproval of the rich any more than I share the clamour for the restoration of flogging. I put myself against what I know to (be the main stream on both these matters. Although I put myself against it, however, I recognise very well that it exists.
The Chancellor has to take into account what I prefer to call the politics of envy. Without any question of whether it pays him to do it, he must penalise the expense account plutocracy.


He must do something to gibbet the gossip-column plutocrats, not because it will pay him to do it—I do not believe that it will—but because it will give the greatest pleasure to the masses to see it being done. [Interruption.] I am describing without commenting. I will comment in a moment.
If the Chancellor wants to increase production, I can tell him one way which would be more effective than any other. Let him so contrive matters that it is possible to put up in every factory a poster showing Mr. Charles Clore applying for National Assistance. I use Mr. Clore not as a person but as a symbol. When the workers can see the Clores and Cottons and speculators being ill treated by the Treasury, then the satisfaction which they feel will make them accept wage restraint. Until they see this ill-treatent, however, it will be idle to exhort them to accept wage restraint.
I ask my right hon. and learned Friend to liberate himself from logic, to forget about the Radcliffe Report. The time has come to bury Radcliffe and not to quote him. My right hon. and learned Friend must put aside any arguments that may be used to show that it is not worth his while, in quantitive terms, to put a tax upon capital gains or to deal with expense accounts or with speculators. He must consider not the economic consequences of doing so but the psychological consequences. I believe that that is the price which he and the Tory Party must pay in order to gain the assent of the masses to wage restrictions. Unless this is done, wage restraint will not succeed.
I ask my right hon. and learned Friend to accept—little as he and I may like it—the existence in our country of a wide and powerful streak of envy and jealousy. That is a fact about England, like it or not, and I hope that my right hon. and learned Friend, when considering the proposals he intends to put before us next week, will remember Tallyrand.
Tallyrand survived all the ups and downs of his day, and, at the end of it, it was said of him that he had done so mainly because of one reason—that he treated public opinion very much as he treate weather. One does not

approve of the wind and the rain—one may dislike them heartily—but one recognises that they are there. One does not argue with them—they are not to be argued with—so one must adjust oneself to their existence, whether one likes it or not.
Whether we like it or not, the Chancellor must adjust himself to the fact that England has this deep streak of envy and jealousy which must be placated. I believe that he will not get his policy of wage restraint through unless he offers human sacrifices to that feeling. I therefore urge him, in making his new proposals, formally and unconditionally to surrender to the "floggers lobby" in the Labour Party.

8.13 p.m.

Mr. William Hamilton: I was glad to hear the hon. Member for Uxbridge (Mr. Curran) urge the Government not to preach in this context. I might say to him, in that same spirit, that it is no good pursuing the profession of a prostitute on six days a week and then going to St. Paul's to preach on Sunday, hoping to convert the congregation to Christian morality. But that is the sort of thing that has been happening in this country in the past ten years.
I was surprised by the hon. Member's speech in view of the article which he wrote in the Evening News last week. I have that article with me. He has just said that the Chancellor must not ask for wage restraint unless, at the same time, he asks for proportional sacrifices from the minority at the top. But he did not say that in the Budget debate, when we were discussing the 300,000 Surtax payers, nor in his article last week, when he was working for his corn. In the article he said:
If the Government wants us to work harder, and spend less, it must stop making appeals to us.
That is consistent with what he said tonight, but he went on:
It must create the conditions in which we have got to work harder and spend less. There is only one way to make people spend less. That is to give them less money to spend. In other words, to make them pay higher taxes.
Yet the hon. Member supported the Government in the Budget and in the Surtax proposals. The article went on:
But will they agree to do that? They will—provided they are told, in language they can


understand, why it is necessary to make them spend less.
Continuing to talk about wage restraint, the hon. Member went on:
To put the matter brutally: if we want to stop inflationary wage increases, then we must refuse to pay them.
There is no talk there about asking for proportional sacrifices from the rich minority. According to that article, one simply says to industrialists—as the Government are seeking to do now—that they must not pay wage increases. That is what the hon. Member was saying in the Evening News last week. He did not say so tonight, but in the article he added that we must be ready to put up with strikes if necessary rather than pay wage increases. He said:
I say 'if necessary'. It may be that people will refuse to believe in the reality of crisis until they see the Government ready to face a strike rather than accept an inflationary wage demand.
Those are the sentiments which the hon. Member expressed last week.

Mr. Curran: I appreciate the hon. Gentleman's courtesy in giving way to me, and also the compliment he pays me in studying me so carefully. He could not be better employed than in doing that.
He will appreciate that there was a sentence in that article—which, to be fair, he quoted at the beginning of his speech—in which I said that there had to be sacrifices by the minority as well. The rest of the article is not in the least bit inconsistent with that. I am not receding one syllable from what I wrote. What I have done tonight is to elaborate one phrase which I used in the article—the phrase which he has quoted. I elaborated it tonight because I could not do so in that article, as I had other points to make—and this is the best place to do so.

Mr. Hamilton: Now that the hon. Member has made a second speech, I challenge him to produce a single sentence in the article to refute what I have said. There is not a single mention of the minority at the top from whom he wants sacrifices. Of course, I appreciate that he now wants to match his speech tonight with the article, but it is impossible to do so.

Mr. Curran: Mr. Curran rose—

Mr. Hamilton: I shall not give way again, for I must get on. The fact is that this Government for ten years have been pursuing a policy of moral decadence. I have very little time for the people who bandy statistics about. We can prove whatever case we want to prove by selecting statistics.
If one examines the Government's record since 1951 one finds the steady erosion of moral standards in this country. Now, after ten years of this, the Prime Minister—who was preaching the base materialism of "You've never had it so good" before the General Election—comes along in the middle of a crisis after the election to make a great moralistic appeal and expects it to be understood and appreciated by the ordinary people. We will get a spate of these fine words in the days to come.
The Prime Minister's son, the hon. Member for Halifax (Mr. Maurice Macmillan) said, "Let us forget the past". I am not surprised.

Mr. Maurice Macmillan: I never said, "Let us forget the past". I merely said that the attempt by hon. Members opposite and some hon. Members on this side of the Committee to apply the lessons of the past precisely to the future and to imagine that those conditions still existed would lead to disaster, because, although we could learn from the past, those were not the conditions which we were now facing.

Mr. Hamilton: The hon. Member can wriggle as much as he likes, but the words are on the record and tomorrow we will be able to read what he said.

Mr. Macmillan: I am about to see the record.

Mr. Hamilton: We will leave the record.
I want now to refer to the best moralist we have got—the Home Secretary. My right hon. Friend the Leader of the Opposition quoted him this afternoon. So did Mr. Shonfield in the Observer last Sunday—"The Nanny Approach to Economics" was the very appropriate title of the article. In the course of his week-end homily, the Home Secretary quoted these sentiments:
'Nations gain their right to rise
By service and by sacrifice.'
Thus out of our economic difficulties good may come, especially if our party gives a lead


to the country in calling for moral values to emerge instead of materialist appetites.
Those were the words. In that context, Let us examine the Government's record for the past ten years and see whether they were giving a moral lead, or whether they were whetting materialistic appetites.
Let us consider I.T.V., commerical television. Was that a call to moral values, or was it to satisfy the Tory materialists? A book recently published about pressure groups and reviewed by my hon. Friend the Member for Woolwich, East (Mr. Mayhew), again in the Observer an Sunday, showed this to be one of the grossest campaigns of greed and deceit that this country has ever known. Its leaders were and still are sitting on that side of the Committee. We saw evidence of the pressure groups in the Budget debates. On the Order Paper there is a Motion, in the name of my hon. Friend the Member for Blackburn (Mrs. Castle) and other hon. Members, on this theme that the pressure groups are increasingly coming into this place for their pickings.
Was the introduction of Premium Bonds by the present Prime Minister an appeal to moral uplift, or to materialistic appetite, to getting something for nothing? That is the test by which the Government stand or fall.
In the last few months, the legislation we have considered has included the Betting and Gaming Bill and the Licensing Bill, and we are now getting the bingo halls and the betting shops and the "pubs" open for extended hours. Those are the things on which the Government have been spending the time of the House of Commons. They then come and make their high-falutin moral appeals and expect the workers to react. They are expecting the impossible.
Then we got the clarion call which the Prime Minister gave at the 1922 Committee meeting last week. His clarion call was, "I am worried, but I am not frightened". He said the same at Suez, until the bills started coming in at a time when he was at the Exchequer. He was worried then, and he was frightened when he saw what bills he had to pay.
The same Government were responsible for the Bank Rate leak episode, when we had that never-to-be-forgotten phrase, "It might not be British, but it

makes sense to me". That was said by a supporter not of my party, but of the party opposite, the party which has governed the country for ten years. The brief answer is that the Government have sought to lull the people with bread and circuses instead of giving them the wherewithal to maintain our competitive position overseas and to maintain our moral fibre.
The continuing emphasis has been on getting something for nothing. The prizes in our society today go not to the teacher, not to the nurse, not to the social worker, but to the Mr. Clores, the land speculators, about whom we will be talking later this week, the share pushers, the takeover bidders. Our priorities are as wrong as they possibly can be.
Russia and the United States each put a man into space. What is our response? We put a stripe in our toothpaste. Russia and the United States produce the best rockets and the best satellites. The other day we had a boast from a Minister that we produced the best football referee whistles.

Mr. Denis Howell: It was typical of the decadence of this Conservative Government that, when the Minister said that, he failed to add that we also produced the best referees.

Mr. Hamilton: It is common knowledge that the Russians and Americans are producing enormously greater numbers of scientists and engineers than we are. What are we doing? In the last Ministry of Labour Gazette, there is a now category of apprentices—apprentice bookmaker's clerks.
They are the comparisons which we have to make in this competitive world. I could give examples all night. The other night the hon. Member for Kidderminster (Mr. Nabarro) proudly boasted that his 30-guinea fee to the Carlton Club was tax free. A school teacher earning £10 a week who buys a text book is not allowed to put down its cost as an Income Tax expense. What kind of priority is that? We spend millions of pounds producing cars, and the Chancellor of the Exchequer has to get to his meeting on a motor bike. That was because he does not provide the money to build the roads to put the cars on. He then said:
For my sins"—


and by God, they are big enough—
I am Chancellor of the Exchequer.
Appropriately enough this happened in Flintshire. The right hon. and learned Gentleman went on:
For some time past"—
not just now, but for some time past—
incomes—wages, salaries, dividends and profits—have been increasing faster than national productivity.
The right hon. and learned Gentleman did not add that some of these things had been increasing faster than others. According to the figures we were given a short while ago, in the last two years dividends have increased very much faster than wages.
This is the context in which this debate is taking place, and we all know that the Government are looking for scapegoats. The time was when they could blame the Labour Government—"Six years of Socialist Government", I think the bad man from Portsmouth used to say.
An appeal is made for wage restraint. The trade unions are the scapegoats—the irresponsible trade unions. Does the right hon. Gentleman regard the current wage claims of the miners, the railway workers, the agricultural workers and the teachers as irresponsible? Does any hon. Gentleman opposite contend that any one of those claims is irresponsible? Is the claim put in by the firemen in Scotland irresponsible?
We have been trying to find out what the Chancellor of the Exchequer will say next week. I was never very good at mathematics while I was at school. When I was learning mathematics, the teacher very thoughtfully provided me with a text book with the answers at the back. I used to look at the answer first, then look at the problem, and try to work out the middle bit. We all know the answers. We want increased productivity. We want increased exports. We want stable prices. The problem is how to get the bit in between.
The Government's medicine over the last ten years has clearly not been the right medicine, and there has not been the right doctor either. If there is a combination of the wrong doctor and the wrong medicine, we will never get the right solution.
Let me put one possible solution which has not been touched on. A great proportion of our national wealth is allocated to defence expenditure. I should be the last person in the world to say that we ought to abrogate our defence responsibilities, but I believe that we are carrying far too great a burden in the Western Alliance.
Last Thursday I was present at the tiring of the Thunderbird missile in Anglesey. I saw this thing go up and hit its target right enough. It should do; it cost £30,000 a shot. I understand that the original estimate for that missile was £2½ million. As far as I know, the cost is now £40 million.
The £1,650 million that we are now spending on defence is nearly twice the expenditure in 1950. Since 1950 the United Kingdom has spent more on defence than any other country in Western Europe. Per head of population the expenditure is about the same as in France. In Western Germany—and we are supposed to be in the same alliance as Western Germany, and we have had figures put to us from both sides of the Committee to show how Western Germany is outstripping our economy on any test—defence expenditure per head of population is two-fifths of our figure. In Denmark it is half what we pay. In Belgium it is three-fifths. In Norway and the Netherlands it is three-quarters.
But that is not the whole story. The number in the Forces now is about 500,000, plus about 1 million in civil employment directly supplying them. Those employed on production and research for defence purposes number about 950.000. Taking them all together, about 7 per cent. of our total working population is engaged in defence work.
The share of defence production in total output varies from industry to industry. In aircraft it accounts for 54 per cent.; in shipbuilding for 22 per cent.; in metals, engineering and vehicles, for 8 per cent., and in construction, for 5 per cent. Clearly the increased burden of defence could not be shifted on to the consumer goods industries, and exports and investments have therefore had to take the strain. As the burden has increased so our investments and exports have suffered. Not only that; it has made an enormous


demand on our research and development resources. The D.S.I.R. report on industrial research and development expenditure in 1958 showed that nearly two-thirds of the research done by private industry was no defence contracts. In 1956, two-fifths of all professionally qualified scientists and engineers were employed on defence projects, although that proportion fell in 1959.
These are facts which bear some examination. I hope that on Tuesday the Chancellor of the Exchequer will give us some indication of what he will do to get our friends in the Western Alliance to take on a much greater proportion of the Alliance's defence expenditure than they have done hitherto. I rather suspect that he will concentrate his activities in other directions. If the medicine is to be anything like it has been before I fear that we shall get the usual bromides—hire-purchase restrictions, those confounded regulators that plagued us for weeks, interest charges, the homilies about morals and sacrifices, and all that kind of nonsense. The people will not respond to that, for reasons which I gave earlier.
The Government have been too immoral in the last ten years for the people readily to accept that kind of talk any longer. The newspapers this morning contained a terrible indictment of the kind of society in which we live. Girls in one of our schools are now putting yellow golliwogs on their tunics to show that they have lost their virginity. This should be the emblem of the Tory Government.

8.39 p.m.

Mr. Stanley R. McMaster: The hon. Member for Fife, West (Mr. W. Hamilton) and most Opposition speakers today have been having a real heyday. They have been crying "Woe, woe, woe!" The Leader of the Opposition gave an expert analysis of the situation today. He listed all the troubles that beset this country. But will he agree to any wage restraint? No. He put forward no remedy which could properly cure the position that we are in today.
If one examines the figures one finds that there is no doubt that our economy is buoyant. We have full employment

in Great Britain though not in Northern Ireland, but even in Ulster we feel particular gratitude to the President of the Board of Trade. There are signs of expansion in Northern Ireland, with new industries being set up and a fall in the unemployment figures in the last few months. Even in Northern Ireland there are signs of growing prosperity and expansion.
However, these figures of an expanding economy at home and greater prosperity do not match the balance of payments crisis which has been the basis of this debate. There have been gloomy forecasts in the financial Press of what will happen in the autumn and what is to happen if sterling comes under increasing pressure. This is the fruit of borrowing short and lending long. The root of the trouble, as I think is accepted by hon. Members on both sides of the Committee, is the fact that we are importing more than we can pay for with our exports. A particularly regrettable feature is the fall in our invisible exports.
There was last year a deficit in our balance of payments of £344 million and the trend over the last few years has been one of increasing deficit and greater difficulty. In other words, this country is living beyond its means and on credit. This situation cannot, of course, continue. If an individual found himself in such a situation he would face bankruptcy, and for a country in such a position the final solution is the undesirable one of devaluing the currency.
Is this state of affairs a sufficient cause for the degree of alarm which has been expressed by hon. Members opposite? Is it the solution to our problems to decry British industry? The gross national product, as was said by my right hon. Friend the President of the Board of Trade, amounts to £20,000 million. Our deficit is £200 million—1 per cent. of the gross national product. If productivity throughout the economy could be increased by 1 per cent. or 2 per cent., which means a little more work from every person, we should not need to use these new regulators which the Chancellor has introduced.
The regulators are blunt weapons. They have been used frequently during the past ten years. First we use the accelerator, and then the brake. Now we have a better brake, perhaps a disc


brake. I urge the Chancellor to be careful how he uses such a fierce brake lest the driver himself go through the windscreen. [Laughter.] Perhaps it is as well that we are not discussing motorcycles.
I should like my right hon. and learned Friend, before the announcement to be made next week, to consider how to protect areas where there is a high rate of unemployment, such as the north of Scotland, Wales, the North-East Coast and Northern Ireland. I was most grateful to my right hon. and learned Friend for accepting an Amendment to the Finance Bill relating to the payroll regulator. But it is unlikely that this regulator will be used and I am more concerned about the use of the other regulators which the Chancellor has; the Purchase Tax regulator and the money regulators, Bank Rate, special deposits and hire-purchase controls. All these regulators are blunt weapons and temporary expedients. It would be very much better if the Chancellor could find some fundamental remedy for the problems which face the country. This need applies not only to the Government but to hon. Members opposite.
Hon. Gentlemen opposite have admitted freely in their speeches in the debate that we are facing a severe crisis, and if they admit that and agree with it they must be prepared to join with the Government in taking the steps which will put it right. There is a task here for all classes in the economy which not only concerns employees but also employers—[HON. MEMBERS: "Surtax payers?"]—and Surtax payers as much as anyone else. I agree with what has been said already about profits being limited. Profits cannot be allowed to rise by 24 per cent. and wages by only 7 per cent. but I should like to see them transferring their attention from these regulators, which are so easy to put on but so difficult to take off, and very often, when we take them off, leave us in exactly the same state as when we started.
I should like to see the emphasis placed mainly on increased productivity and increased encouragement for exports. It has been said very often that it is impossible to encourage exports by giving direct inducements to the exporter. I should like my right hon. and learned Friend to consider whether there

is not some way in which he could encourage exports directly by giving some inducement to the exporting industries and to the people who go out to find new markets for our goods. As one of my hon. Friends said in an earlier speech, one has to face facts, and exhortation is not sufficient to encourage the ordinary person, for the pure love of it, to work harder, increase his productivity and increase the amount he is doing in the export trade.
What we need now is some inducement of the same class as we know is being given in European exporting countries. They have very skilfully worked out devices in Italy, Germany and France for remitting part of the taxation to encourage exports. Unless we are prepared to take similar steps ourselves, we cannot right this balance of payments crisis as quickly, effectively and fundamentally as is required.
One other point. I ask the Chancellor, in considering the proposals which he is bringing forward next week, to see whether it would not be possible to use the labour resources of this country to better effect. I ask him whether it would not be possible to channel the defence expenditure, which has just been referred to by the hon. Member for Fife, West, into the development areas, and whether it is not possible to build some of the ships that we need for the Navy in the shipyards which, at the moment, are going through a very depressed time in order that those shipyards may be protected and the employees retained in them until the industry as a whole recovers from its present depression.

Mr. John Mackie: Will the hon. Member say how his compliments to the Government Front Bench tie up with these words that he said:
In my constituency there is more unemployment in the shipbuilding industry … than in any other part of the United Kingdom."—[OFFICIAL REPORT, 13th July. 1961; Vol. 644, c. 694.]
How do those statements tie up?

Mr. McMaster: The hon. Member has been so busy searching out the correct reference to what I said that he has missed the last two or three minutes of my remarks. Perhaps if he peruses HANSARD tomorrow he will find that I gave the answer in the last two minutes of my speech.
I ask the Government Front Bench whether (it is not possible to channel more of 'the munitions work to areas which have high unemployment and where it is difficult to encourage exporting industries to go. All that we require in order to meet the problem facing the country today and to balance our exports and imports is a little extra effort. The Government must lead the way. They must show a fighting spirit, which this country is capable of showing. I believe it quite possible to engender the correct spirit in the working people and employers. Given the lead and given the incentive, I think that they will pull together to make the effort which is necessary to balance our payments.

8.52 p.m.

Mr. Harold Wilson: This has been a remarkable debate. I do not think that in the sixteen years that I have been in this House I have ever heard a more one-sided debate. The right hon. Gentlemen opposite have been right up against the ropes the whole day. It might have 'been a little more dignified if they had thrown in the towel round about half-past four.
We have had some remarkable speeches. The hon. Member for Belfast, East (Mr. McMaster) wants the Government to show more fighting spirit. So do we, but we want to be quite sure against whom they are fighting. The hon. Member for Halifax (Mr. Maurice Macmillan), in one of the more notable understatements of the debate, went so far as to admit that old-fashioned Conservative ideas have not been 100 per cent. successful. The hon. Member for Uxbridge (Mr. Curran) came out in favour of a capital gains tax for rather odd reasons of a somewhat masochistic character, but nevertheless he supported our proposals in that direction.
The President of the Board of Trade, who is not with us at the moment, nobly carried out the instructions he had from the Treasury to fill in time for half-anhour without saying anything. I think that he did it very well and entertainingly. He agreed with my right hon. Friend the Leader of the Opposition about the need for dedicated and professionalised overseas salesmanship. What we must ask him is how we can get that dedicated over-

seas salesmanship when all the prizes, all the perks, all the plums and all the status go to those who sell things on the home market, particularly with television advertising.
When hon. Members opposite sold out to the pressures of the advertising industry a few years ago—we have just had a chance of reading what went on behind the scenes in all that manoeuvring—they made an important decision, whether they knew it or not, which has had a most serious effect on our sales efforts in the export market.
As a nation we are spending £80 million on television advertising for the home market. The President of the Board of Trade did not tell us today how much we are spending on advertising for export markets, but from some of the speeches which have been made from both sides of the Committee it is clear that we are not making one-tenth of the effort to advertise for the export market that we are making for the home market.
I welcomed the speech of the President of the Board of Trade, because I thought I detected—we may know more about this next week—perhaps a glimmering of an appreciation of the need for more purposive planning in this country, for expanding production, for growth and for the production of the things which we most need. That is what makes all the more extraordinary the fact that he should choose this moment of time in his Departmental capacity to sell off the Government-owned factories on one of our oldest-established industrial estates. It is extraordinary that he should do that, and it fills many of my hon. Friends in other unemployment areas and development districts with very great anxieties about what the Government will do as they de-schedule one area after another.
Nevertheless, I think that the right hon. Gentleman gave a very good performance. I sympathise with him. He has so many speeches on the record in these economic debates that it is simply a question of going through them for a moment or two to find which are the best to quote. Perhaps I should offer his speech, filled with bounding enthusiasm, immediately after the last election, when he ended a very rumbustious speech at the Despatch Box by saying:
The fact is that our policy is one which has been working, is working and will continue


to work."—[OFFICIAL REPORT, 28th October, 1959; Vol. 612, c. 281.]
How it is continuing to work was shown devastatingly by my right hon. Friend this afternoon when he showed that the gold figures had fallen by £150 million in nearly four months and that, as estimated by The Times last week, but for the emergency aid, rather humiliating aid, which we are receiving from the European Central Banks, as they voluntarily hold sterling, our reserves would have fallen by £300 million in four months—almost a third of our total reserves. Even disregarding this special aid from the European Central Banks our gold reserves today, after ten years of Tory Government, are materially below the figure at which they stood in October, 1951.
On the balance of payments, my right hon. Friend gave the figures both for the export-import balance and for the invisible balance, and there can be no doubt that we are doing very badly in the relation between our exports and our imports. I will not weary the Committee with all the figures. My right hon. Friend drew attention to the fact that in so many of our industries we are no longer as competitive as we were and that we are importing more and exporting less—and these are industries producing manufactured goods. We are always told that with this fresh wind of competition blowing through British industry it will become more dynamic and we shall export more. But that is not happening. In 1957, the Minister of Aviation—whom we welcome back from his travels—gave us a 7 per cent. Bank Rate and a whole host of measures designed to slow down the economy with one purpose—to drive more goods out into the export markets, to make us more competitive, to strengthen the currency so that we should export more goods abroad. At the same time we had a substantial measure of liberalisation of imports which has continued ever since.
What has happened? Our imports of manufactured goods since 1957 have risen in volume by 55 per cent. Our exports of manufactured goods—the things which we ought to be exporting—have risen by only 10 per cent. The increase in imports is five and a half times as great as the increase in our exports of manufactured goods, which means that the cold draught of competition has not done very much good there.
There are reasons for this. There was the pull of the home market arising out of the election boom which is partly responsible, but is it not clear—my right hon. Friend took one or two examples this afternoon—that in one industry after another our manufacturers are becoming less competitive than their overseas rivals? In one industry after another where we had a substantial export performance we now have imports in increasing volume. Some of the industries which were net exporters have been turned into net importers, and the gap between our exports and our imports in very many industries has narrowed.
When asked about manufactured goods this afternoon the President of the Board of Trade said, "We are importing machine tools and machinery for British industry and if we import these, we shall have more to export". But the one thing that neither he nor any other member of the Government has ever appreciated in the ten years of these debates is that, of course, what is wrong is that we have failed to expand the industries that could produce the goods the world needs.
If, four years ago, the Minister of Aviation, facing the particular crisis that he then had on his hands, instead of going in for an orgy of deflation—with brilliant timing, at the very moment when the very world itself was plunging into deflation—had applied the resources of the Government purposively to expand some of the key industries—not to restrict them, not to reduce them, but to expand them—we should not have this dilemma about which the President of the Board of Trade was whining this afternoon. We should be able to export more, and supply the needs of the home market without racing into serious economic difficulties.
My right hon. Friend referred this afternoon to the "invisibles", and I am glad that the President of the Board of Trade spent some time on this question, because in three successive economic debates I have raised the subject, but we have not had a single word from any Minister. It is only recently, when correspondence started in The Times and the Chancellor made a few speeches, that this has become a fashionable subject for anxiety.
For example, it was eight months ago that I got figures from the Government, about our net overseas military expenditure, which is rising rapidly every year—£80 million in the first half of the last year. The worst feature in the Government's expenditure is the military expenditure. I hope that the Chancellor will this evening tell us what the Government have in mind to reduce this very heavy drain on our resources.
I have said before that every new Minister of Defence is more expensive than the last. One of them "blues" £100 million on Blue Streak at home, while another spends £85 million in net military expenditure abroad. I hope that the Chancellor, who has vast experience both as Minister of Defence and as Foreign Secretary, will tell us that he is putting that experience to good use in saving some of these millions of pounds.
Then there is oil. For some reason which I can only surmise, the Government are secretive about the oil statistics to an extent which gives real grounds for suspicion. They have never given us figures of the net oil earnings, or even any figures that would enable us to estimate them. There is no doubt that we poured very heavy resources into the oil industry a few years ago, and it is now clear that the yield in terms of foreign exchange is a great deal lower than anybody ever thought that it would be.
Then there is the figure called "interest, profits and dividends." Here, again, there is a serious worsening. That, as my right hon. Friend says, is due to the high interest rates that we have to pay on our borrowed money, but the other big fact—as we have said on many previous occasions—is that British firms are not bringing back the profits they earn overseas.
We warned the Government that this would happen when, in 1957, the Minister of Aviation introduced a system of overseas trade corporations. We then said that it was one of the most glorious tax "fiddles" ever invented by a Chancellor. If hon. Members care to look at the debates in 1957 they will see the warnings we gave, and if the Government are serious in their view of the worsening of that overseas situation they will repeal the relevant Sections of the 1957 Finance Act.
Turning to the home situation, we have the fact that, as one after another of my hon. Friends have pointed out, production has been virtually at a standstill for fifteen months. Today, since my right hon. Friend has spoken, we have the figure for the latest month—still no change. Here we are, with what we all welcome, a big increase in industrial investment, and with a shortage of labour—we keep hearing from Ministers that our labour resources are strained to the utmost—yet production remains stagnant. Does it not strike the Government as something very strange that in a time when we have all this new investment and additional employment, production is stagnant and productivity is actually falling?
But this, of course, was deliberate policy. Last year, the Government used every weapon at their command to hold down production, so what do they expect? They believe that if we hold production down, wages and prices will remain stable, but the events of the last three years have proved the exact opposite. As we have told them in debate after debate, it is when production is held down and productivity is battened down that costs and prices rise. In 1959, when production and productivity was rising, costs and prices were kept steady. If the Chancellor wants to stop this present, sudden, sharp increase in costs and prices—5 per cent. increase in the last ten months—and if he wants to hold it, the way is not by restricting production but by expanding it.
Surely the Government have learned by now that when one restricts production, whether by hire-purchase restrictions, interest rate policy or any of the other techniques which they have used over the years, the result is not a fall in prices but an increase in unit costs—and that means higher prices. Surely they have learned that lesson by now. Yet here we have a sharp rise in the cost of living. Prices, costs, fear of the wage spiral, all at a time when, by common consent—and hon. Members have agreed with this—export markets are becoming more competitive every day.
Another sign of an economic system out of hand is the price of gilt-edged. It is going down and down. There is no confidence in the future of the gilt-edged market, and that means hardship—in some cases, as hon. Members know, great


hardship for those who invested their savings in gilt-edged. The price of gilt-edged used to be regarded as the measure of the national credit. That was the phrase used in classical times. "The national credit stands at such-and-such a figure," was the phrase. Our national credit, by that test, is today at a practically all-time low, because consols are practically lower than at any time in our history.
Are hon. Gentlemen opposite proud of that? Are they proud of this decline in the gilt-edged market? War Loan is just over 50 Let me remind hon. Gentlemen opposite that under the Labour Government, despite our immediate post-war problems, War Loan fell by less than 16 per cent. during the lifetime of the Labour Government. Under the Conservatives, War Loan has fallen by over 40 per cent. Are they proud of that? This afternoon my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) was referring to investment when, of course, hon. Gentlemen opposite started bawling out something about Daltons. Hon. Gentlemen opposite are, of course, as predictable as Pavlov's dogs. One has only to mention gilt-edged and they start drooling at the mouth about Daltons. But let me inform them of this; Daltons have fallen more under the Conservatives than they did under the Labour Government. They have fallen from 64.7/8ths in October, 1951 to 38.3/8ths today—a fall of 41 per cent.
Surely these are the outward measures of the crisis; gold reserves running at a dangerously low level, sterling at its lowest for three years, the worst balance of payments figure since the Korean war, production stagnant, productivity falling, prices and costs rising sharply and gilt-edged aground. What about the phrase "Life is better under the Conservative system"? And "Do not let Labour ruin it". With these figures I have just quoted, perhaps the Chancellor will tell us who has ruined it in the last two years?
This debate is the moment of truth, not only for the Tory Party but for the nation. Today we have the consummation of ten years of Tory policy—the fruits of ten years. This is not one more in the series of ups and downs we have had since the war. This is a secular crisis and a long-term trend, the payoff for ten years of Conservative policy.
We have had the lowest rate of expansion in Europe. Only one country has had a bigger increase in prices, as my right hon. Friend said. This represents an utter failure to increase exports, which have gone up by only 23 per cent. since 1951. Not another country in the world has done as badly. Are hon. Gentlemen opposite proud of that? Can they name one country? The silence is deafening. A disastrous balance of payments position, the worst record of any advanced country in its balance of payments—all this despite the remarkable conditions that the Government have had.
Since 1951 the terms of trade have moved in our favour by no less than 23 per cent. But granting even that for every £100 that we exported in 1951 we get the same volume of imports by exporting only £77 today, we have this deficit. The right hon. and learned Gentleman is capable of calculating that this windfall gain in the terms of trade in the last ten years is worth £1,400 million a year to our balance of payments; or if we take the cumulative total over the whole ten years, something between a £6,000 million and £7,000 million windfall. Yet our balance of payments situation now is almost worse than at any time in our past history. Internally and externally our economic policies have broken down. Even The Times recognised it in its leading article last Thursday, and when The Times recognises a truth we can be pretty sure that it is something that has been self-evident for years.
I am not going to weary the Committee by quoting all the warnings that we have issued year after year in economic and Budget debates. They are all on the record and I challenge hon. Members to look them up. If they do, they will find that we would have to withdraw precious few of the warnings that we have uttered. Compare that with the complacent outpourings of right hon. Gentlemen at the Dispatch Box year after year.
Basically their fault is three-fold. First, in their mad rush for freedom to make profits, freedom to speculate and make more out of capital gains and more out of rents, the country has lost its dynamic, its sense of purpose—its economic, social and moral purpose. It has rejected the planning measures


needed to strengthen the foundations of our economic base.
Secondly, when the call has been for expansion, more production, more investment and more export the Government have met every crisis with panic measures and restrictions which hold down production and hold back investment, so that when the next crisis came the nation's economic base was too narrow and thin to sustain the burdens and strains which were put on it. The main measure which one can take in a crisis is to build up the basic industries and, above all, the export industries so that when the next crisis comes we can meet it. Right hon. Gentlemen opposite have panicked into further restrictions.
Thirdly, when the need of the country has been for sacrifice, discipline and leadership so as to build up investment in export industries, they have gone in for the lush and easy profits of the home market. Above all, when the call to the hustings has come they have twice, in 1955 and 1959, sacrificed the prerequisites of our economic survival to a vote-winning consumption boom for which we are still paying the price. This crisis is, at the same time, the pay-off for ten wasted years and for their "never had it so good" election boom.
Some of my hon. Friends have been calling for a four-year plan. We should make no mistake—right hon. Gentlemen opposite have got a four-year plan. They have been working to it. They have followed it religiously in two Parliaments. The plan is this: in the first year—that is, in 1955 and 1959—they win an election on a home market boom. In the next year—in 1956 and 1960—one cannot get tough too quickly, so they have a standstill Budget and restrictions on production. In the next year—in 1957 and 1961—they begin on a vast handout to their friends the Surtax payers, financed in 1957 and 1961 by increases in insurance contributions. The pattern is very regular.
Then in the summer we get a major crisis. We get a high Bank Rate, emergency measures bringing expansion to a stop and deflationary measures directed to producing that necessary little margin of unemployment that we keep being told about. All this time our production is failing to increase. It is falling below

that of other countries. Then we come to 1958 and 1962—another "standstill, wait for it" Budget. They know that memories are rather short, so they do not want to give it away too long before the election. Then, while production and investment are still languishing, with unemployment growing, we are all ready for election year when we have to take up slack in the economy, with a magnificent tax handout for everybody. There is more for the rich even so, but something for everybody, plus 2d. off beer. That is a special dodge of the Prime Minister's. So it really is a libel on right hon. Gentlemen opposite to say that they have no plan. They have a plan, but it is not directed towards our national economic strength. It is directed to keeping the Conservatives in power.
Tonight, again, the Prime Minister is not with us. It is really becoming a scandal that the First Lord of the Treasury is not here to answer. [HON. MEMBERS: "Where is he?"] I suppose he has some sense of shame. We do not mind that. He should take it a little further and get out altogether. But, so long as he is Prime Minister, he ought to be here.
The Prime Minister is a great student of Disraeli. I commend to him—perhaps the Patronage Secretary will pass this on—Disraeli's description of a Tory predecessor of the right hon. Gentleman, someone with strong resemblances to him, Lord Liverpool. Disraeli described him as
The Arch-Mediocrity who presided, rather than ruled, over a Cabinet of Mediocrities … not a statesman, a statemonger, Peremptory in little questions, the great ones he left open.
That is the right hon. Gentleman.
Now, we read in the Conservative Press—

Mr. Frederic Harris: A bit of a flop.

Mr. Wilson: I am grateful to the hon. Gentleman for the phrase I was trying to work towards. Yes, he is.
Now, we read in the Conservative Press the ominous news that the Prime Minister has decided to intervene in the economic crisis. This is no idle threat. No one bears more responsibility than he for our economic crises. He was the first to propound the doctrine that the


right way to fight inflation was to hold production down. On becoming Chancellor, he was panicked into abolishing the investment allowance, and this caused a stagnation in our industrial investment which lasted for three vital years. As we all know, the Prime Minister is more responsible than anyone else for the smug complacency which has pervaded the nation as a result of successive speeches he has made. While his own Chancellor has been telling us how serious the economic situation has been, the right hon. Gentleman has been travelling the country saying that we have never been so well off, and all the rest. [An HON. MEMBER: "He said it today."] He said it again today in the House.
One of the most serious features of the Prime Minister's leadership—if that is the right word to use in speaking of the right hon. Gentleman—is that he has been speaking all over the country, degrading, debasing and debauching our national life by preaching the gospel of the free-for-all, the gospel of grabbing all one can. His is the gospel of the self-regarding affluent society where, as I heard a distinguished churchman say the other day, the verb "to have" means so much more than the verb "to be". That is the affluent society which hon. Members opposite have preached, and many of them are here now only because of their success in preaching that doctrine at the last General Election.
Now, safely in mid-term, counting on the short memories which throughout history have always been the Conservative Party's greatest asset, right hon. Gentlemen opposite tell us that we must stress the moral aspects of our national life. The Home Secretary is another notable absentee tonight. I do not blame him.
What did the Home Secretary say:
Nations gain their right to rise.
By service and by sacrifice.
This from a Tory Minister!—
The devil was sick, the devil a monk wou'd be".
This from the Home Secretary, the architect of the 1955 election Budget, who fought the 1955 election on the claim—what was the proud claim of the party opposite in its manifesto?—
We have broken away at long last from the regular cycle of crises.

It was six years ago when the party opposite made that claim.
What has the Leader of the House and Chairman of the Conservative Party contributed, or indeed what have any of them contributed, in the name of service and sacrifice to the solution of our economic problems? One thing which the right hon. Gentleman the Home Secretary has created for us is the betting shop. Is that a contribution to service and sacrifice? What service and sacrifice do we get in an economy where the genuine hardworking business men, executives, scientists and salesmen are subordinated under a system which exalts the take-over bidder, the tycoon, the financier, share-pusher, speculator and property racketeer and in which some of our staple industries have so declined—[HON. MEMBERS: "Hear, hear."]—I am delighted to welcome the right hon. Gentleman the Home Secretary.
I commend this thought to the Home Secretary:
Nations gain their right to rise, by service and by sacrifice;
So Britain aims to reach the top with capital gains and the betting shop!
I ask the right hon. Gentleman: what service and sacrifice does he see in a situation in which industries, like the shipyard industry on Clydeside, cannot offer security to their workers who are emigrating to Hamburg where things ate better?
Some workers are coming to this country. The Ministry of Labour has just issued labour permits for some very important key workers who have been lured here by the Home Secretary—croupiers to run the gambling dens! This is a great society in which millions of decent, hardworking people pay their taxes with no tax dodging, yet an organisation exists to persuade rich men to invest their capital in tax havens abroad in order to dodge Estate Duty.
As my right hon. Friend the Leader of the Opposition said, we have land racketeering going on affecting not only housing and town redevelopment. I ask the President of the Board of Trade: with present land prices, how will we build the new factories which we shah need for our export trade? Has the right hon. Gentleman been into that?
I now turn to the Chancellor of the Exchequer. No Chancellor has ever had a bigger build up in the Tory Press. This is—and here I quote the Sunday Times—"the economic master mind", the man who, we were told last December was going "to break the cycle of squeeze and ease." Three months ago we had his Budget. Tonight, while we are all itching to know what he will say, he will be silent. He will talk for twenty minutes, but will say nothing. We sympathise with him. He will say nothing because he is already in a condition of pre-Budget secrecy before the Finance Bill which covers his last Budget receives the Royal Assent. We are facing an Autumn Budget in mid-July. The right hon. and learned Gentleman has out-Butlered the Home Secretary.
The Chancellor of the Exchequer is going round the country by various unconventional means of transport—a fine commentary on the Government's road building programme—making frightening noises about what he is going to do—a twentieth century King Lear:
I will do such things—
What they are yet I know not; but they shall be
The terrors of the earth".
Tonight, the Chancellor does not have much to say, so I will ask him specifically to answer two questions. First, does he still think that he was right to make this vast Surtax hand-out in April? Secondly, does he feel after this hand-out that he has any moral night or standing to appeal to the nation for sacrifice and, as my right hon. Friend said, to the workers for wage restraint? We shall expect answers from the Chancellor about that.
Last week, the Home Secretary said, after he got from poetry back to prose:
Out of our economic difficulties good may come, especially if our party gives a lead to the country in calling for moral values to emerge instead of materialist appetities.
That was after materialist appetities were sated to the tune of £83 million last April for the Surtax payers only. Is it the argument of the Government that their friends can gorge themselves to the full while they themselves now preach the virtues of fasting and restraint to the rest of the community, with one-fifth of

the manual workers getting less than £11 a week? It is they who have to exercise restraint.
We were told that this hand-out, indefensible as it is on grounds of social justice, was done in the sacred name of incentives and that production would bound and exports expand. Is there any evidence that this is happening? We have not seen it in the figures yet. During the Committee stage, we found that a substantial amount was being given to Schedule D Surtax payers on their last year's earnings, the first case known to fiscal history of incentives being retrospective. We found that £19 million was going in Surtax relief on unearned income. Where is the incentive there?
When the Chancellor commended his Budget to the Committee at the end of the Budget debate, he said:
I think that the proposals I have put forward will strengthen our economy, encourage our exporters and gain confidence in sterling at home and abroad, and I ask the Committee to accept them."—(OFFICIAL REPORT, 20th April, 1961; Vol. 638, c. 1518.]
Is that still the Chancellor's view?
The reason for the right hon. and learned Gentleman's silence tonight, while still awaiting for the Royal Assent to the Finance Bill, is that he has already decided that he needs more taxation and that to his April Budget he now needs to add 3d. on petrol, 4d. on cigarettes, 5d. an ounce on tobacco, 10 per cent. more on Purchase Tax, ½d. on beer, more on pools, television advertising, wine, spirits and vehicle duties, because that will be the effect of a 10 per cent. surcharge on indirect taxation.
Did the Chancellor think in April that he would want all this additional taxation? If so, why did he not put it in his Budget and his Finance Bill? I do not believe that he had any idea then. I acquit him of bad faith, but he is guilty of the most prodigius miscalculation. On the Report stage two weeks ago we challenged the Chancellor to put his tax demands in the Finance Bill. He refused. This is muddle and miscalculation beyond all the precedents even of this Government.
When the right hon. and learned Gentleman has finally broken his silence, what will he do? The surcharge on indirect taxation will fight inflation by putting up prices. The Chancellor


should not think that the prices will go down again when the surcharge goes, because the one thing we have found when prices have gone up for one reason or excuse or another is that they stay up. Does the Chancellor think that this increase in the cost of living will help his appeal for wage restraint, or is the aim simply to cause the consumer durable industries, cars and the rest, to lurch once more into unemployment?
To me, it is almost beyond belief that the Chancellor can increase commodity taxation, which is the most regressive taxation, bearing on all the ordinary families, with no surcharge on direct taxation. If he does this, would not the corollary have been not to reduce Surtax but to have increased it? To reduce Surtax in April and to increase indirect taxation in July is about as regressive as the Chancellor can get, and that is saying a lot.
I do not think that many of us expect him to introduce his other regulator, the payroll tax. This has been universally condemned for all the points on which we attacked it in April—unfairness between industries and between areas, its anti-social penalties on apprenticeships and industrial training, and its effect on local authorities, hospitals and other essential services. It has been so universally condemned by industry, and, indeed, by his own party, that the Chancellor has, no doubt, been told to take it out and drown it like an unwanted kitten.
While the Chancellor is still pondering his announcement for next Tuesday—assuming that it is not already drafted—let me give him these warnings. First, I appeal to him not to cut aid to the under-developed areas, whether inside or outside the Commonwealth. It would be a standing reproach to this country if we were to cut supplies necessary for fighting the war on want and poverty all over the world just because we have failed to control our own economy and our own greed.
Secondly, I appeal to him not to follow other Tory Chancellors by thinking that the right way to fight the crisis is by placing burdens on those least able to bear them—the old, the sick, the disabled, the children who take school meals, and the rest. During the weekend, a newspaper said that to do this would be comparable to a board of

directors, which had steered its company on the rocks, trying to get out of the difficulties by increasing the price of meals in the factory canteen.
Thirdly, I urge him not to cut essential investment. In crisis after crisis we have had crippling cuts in essential investment by publicly-owned industry and the local authorities, while far less essential building and other investment have been going ahead. To cut local authority housing and allow the office blocks to continue to go on would be doctrinaire, anti-social and inhuman.
Fourthly, I appeal to him, as did my right hon. Friend the Leader of the Opposition, not to have a wage squeeze in the public sector. Nothing would do more harm to the country than the Government's taking it out—as they have done before—on the National Health Service employees, probation officers, firemen, teachers and others, just because they are in public service—where they may be worth a great deal more to the community than many in the private sector.
Above all, he must remember the warnings of the experience of past crises—do not impose restrictions which will make the next crisis more certain and worse when it occurs. I hope that the Chancellor will take heed of these warnings.
We are not now debating the Common Market, but I say to him that the decision has to be taken on its merits, and should not be taken as an act of escapism from our present economic ills. Whatever the long-term case for going in, whatever the problems of safeguarding entry for Commonwealth goods, the decision to enter is bound to place immediate additional strains on sterling. Imports are likely to exceed exports; there will be freedom of capital movement; and even though it may be considered anti-British to do so, to many people it will make sense to transfer their money to Western Europe as a devaluation hedge.
The condemnation of ten years' rule by Members opposite is that they have left this country in a position of desperate economic weakness when the decision on whether or not to enter the Common Market has to be taken. It is not much use posturing about whether one is to go into the Market or not when one has


been driven to one's knees by the Government's economic policy.
Unless we take the steps necessary to refashion our economic policy and recapture the lost dynamic drive then, as we say in our policy statement, whether we enter the Common Market or stay out will only settle the question of whether we are to be a backwater inside Europe or outside it.
The Chancellor will make his announcements next week. I hope that they will include the things suggested by my right hon. Friend—repeal of the overseas trade corporation provisions and of the Surtax concessions. I hope that they will include some measure for holding back less essential building, a capital gains tax and a tax on land racketeering. I hope that the Chancellor will also do something about dividends and revert to the two-tier system of Profits Tax which we had until 1958.
In the long run, however, the problem will not be solved unless—and here I again use the Home Secretary's words—we can get back to a spirit of service and sacrifice in our national life. Members opposite, after ten years, are now beginning to wish again for the voice and leadership of a Cripps.

Viscount Hinchingbrooke: Never.

Mr. Wilson: The noble Lord should realise that most of the economic gains from which the Government have profited were the fruits of the trees which Stafford Cripps planted against their criticism.

Viscount Hinchingbrooke: Never.

Mr. Wilson: In 1947, winding up a debate on the economic crisis at that time, Sir Stafford Cripps said:
But when we have considered broadly and in detail, as we have during the course of this debate, the actual steps that we must take, we came back to the most important consideration of all: our failure or success will depend in the last resort upon the spirit of our people. The quality of effort that is needed in the next few years is not such that it can be evoked by mere material considerations"—

Viscount Hinchingbrooke: Devaluation after nine times denying it.

Mr. Wilson: or by the intensification of self-interest or competitive self-seeking."—[OFFICIAL REPORT, 7th August, 1947 Vol. 441. c. 1764.]

Viscount Hinchingbrooke: Be yourself.

Mr. Wilson: The noble Lord is certainly being himself. It is all right for him to shout "devaluation", but devaluation was forced on this country four years after a great war, and the Chancellor himself knows that he dare not go into the Common Market without offering devaluation first. Hon. Members opposite had better pipe down about devaluation.
The words I have just read are as apposite and as relevant to this economic crisis now as they were to that crisis which hit this country only two years after a great war—and this is sixteen years after that great war. Hon. Members who want to speak in those accents had better recognise that they must first bring to the conduct of our national affairs the same sense of social justice and moral purpose that Cripps brought. Words alone are fiduciary. They need the gold backing of action. Let hon. Members opposite who recognise this be seized with the courage that this crisis should call forth and march with us into the Division Lobby tonight.

9.37 p.m.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd): The right hon. Gentleman the Leader of the Opposition and the right hon. Member for Huyton (Mr. H. Wilson) both made a straight political point when they said that the country had been lulled into a false sense of security in the last election. As I have said before, that would have come better from them if the Labour Party had fought the election on a programme of austerity.
The right hon. Gentleman referred to short memories in politics. The programme of the party opposite was that there was to be more expenditure in almost every public activity. Purchase Tax was to be reduced and Income Tax was not to be increased. In his final broadcast, the right hon. Gentleman the Leader of the Opposition said:
We certainly can have more prosperity".
For hon. Members opposite now to take a high moral line and to pretend that they did not make an almost purely materialistic approach is nonsense. To talk about a vote-winning consumption boom when, if they had got in, there would have been an inflation which it would have been impossible to measure, is nonsense.
In the very entertaining speech of the right hon. Member for Huyton, I thought I detected a slight note of envy when he described the election strategy. Without acknowledgment to Vicky, he referred to King Lear. The right hon. Gentleman was kind enough to tell me beforehand that there might be a reference to King Lear, so a little speedy research enabled me to discover these lines:
Have more than thou showest,
Speak less than thou knowest,
Lend less than thou owest.
That is a very good precept for right hon. Gentlemen opposite, and I hope that they will ponder those lines and their implications carefully.
I study the Press carefully, and I read the article which the right hon. Gentleman wrote called, "Ten Wasted Years". Have they really been wasted? [HON. MEMBERS: "Yes."] Civil employment is up by 1½ million. [Interruption.] I am surprised that right hon. and hon. Gentlemen opposite regard the retention of full employment as a matter of such small significance. Average weekly earnings in real terms have gone up by a third. The purchasing power of the National Insurance pension has gone up 40 per cent. in real terms—17s. a week more. [HON. MEMBERS: "Contributions."] In addition, 2¾ million new houses have been built,—[HON. MEMBERS: "Not enough."]—4,500 new schools have been built and 2½ million new school places have been provided. There has been—and hon. Gentlemen opposite know this—a great expansion in the social services. Net capital investment has been nearly twice as much as it was ten years ago. Personal savings have gone up from £200 million in 1951 to nearly £1,500 million at present. These are what are described as the wasted years.
As the hon. Member for Fife, West (Mr. W. Hamilton) pointed out, throughout that period we have sustained a defence programme and an aid effort overseas which has made very heavy demands on our economy. I point out to right hon. Gentlemen opposite that we have done this without the aid of £300 million to £400 million of American aid each year. [Interruption.] Right hon. and hon. Gentlemen have made their party points today and they must not resent it if they

get a little back in the same theme. They are always very ready to talk but very reluctant to listen.
Having said that, I do not think that on any considered view these could be regarded as the wasted years. Nevertheless, I do not believe that the country can be complacent or satisfied, and since my first speech as Chancellor of the Exchequer in October, 1960, I have been warning people that we have to do much better. I agree that it would be an intolerable burden to ask hon. Gentlemen opposite to read my speeches, but if they do so they will find that I have made the same point in every speech, that we have to do much better if we are to improve our situation.
This is not just a party point. It is a national one. If we carry our national habit of self-depreciation to an excessive length, it may do us positive harm in the world. I do not minimise for a moment our difficulties or the efforts which will be needed to deal with them, but I think that we should not approach them in a spirit of gloom, pessimism, and defeatism.
I thought that the Leader of the Opposition dealt at rather greater length with the destructive elements than with the constructive elements when he attempted to survey the situation. With respect, I do not think that he did it completely. I want to put before the Committee what I regard as four sets of circumstances with which we are now faced. First, there are certain matters for which this country has no responsibility, such as what happened in the Congo, Cuba and South-East Asia, and what has recently been happening in the Middle East. Those matters affect world stability, however, and as a trading nation we are bound to be affected adversely by any instability in the world.
Then there are some long-term trends—and hon. Members opposite had better begin to be aware of this fact—which are against us. It is no good saying that our invisibles ought to be better, and that there has been a great failure in them. Of course, they are not as good as we should like them to be, but we have to face the fact that there are certain trends which are against us. The emerging countries want their own shipping lines. Further, a strongly nationalist feeling has developed on the subject of insurance, which has brought a great deal


of indirect income to us in the past. In oil, the situation is not what it has been. We must accept these facts, not with a view to bemoaning them but as an added incentive to effort. We must accept that certain long-term world trends are against us.
Then there are certain matters which we cannot control alone, but in respect of which we have a contribution to make. They are matters of which we should take cognizance, For instance, there is the problem of the imbalance of payments. There we are pressing as hard as we can, through the International Monetary Fund—and it is not quite as simple as some hon. Members opposite seem to think—to get this problem of the imbalance of payments recognised and remedied by some expansion of effort of the Fund, or a similar method.
Then there is the fact to which the right hon. Gentleman referred, namely, that in some of our main Commonwealth markets, owing to the changed terms of trade, there has been a substantial falling off in purchasing power which might well have bought some of our exports.
Those are three matters over which we have no control, and only a partial contribution to make. But there is a field within which action is under our control, namely, our competitiveness. The financial performance of certain industries, both in the public and the private sector, must be improved. I am not in favour of a sealed lips policy. These matters should be brought out into the open, if need be, industry by industry.
Since I have been Chancellor I have tried to put the facts before the people. I have probably put forward a greater range of White Papers than my predecessors. I have tried to set before the House the facts, for instance, concerning public investment, Exchequer issues below the line, and Government assistance in the private field. The right hon. Gentleman invited me to begin to disclose what I may say this day week. I will consider carefully what has been said in this debate. As for productivity, I thought that the hon. Member for Ashton-under-Lyne (Mr. Rhodes) made a very thoughtful and useful contribution. I will take into account what has been said by him today.
Reference has been made to creating the right sort of atmosphere. I agree with what has been said about a sense of national purpose. It has been said that I have ruined any chance of creating the right sort of atmosphere by my tax changes in the Budget. All the time I am being told that West Germany is an example, with its dynamic economy, which we should follow. There is not always the same reference to the point made by the hon. Member for Fife, West about defence production. I am always being told that West Germany's is a dynamic economy. I would point out that the managerial class in Germany has been much less heavily taxed than our managerial class. But that is by no means the whole story.
In Western Germany the poorer sections of the population, those earning up to £1,000 a year, are much more heavily taxed than in this country, and that figure includes the National Insurance contribution. That is particularly true of the earnings groups up to £600 a year. They are much more heavily taxed in their lower income groups and they are less heavily taxed in the higher income groups. I have brought the higher income groups into closer relationship regarding taxation. I do not think that I have been unfair. I believe that what I have done will have a direct influence on production and productivity. That is of interest to all sections of the community.
The right hon. Gentleman mentioned the question of taxation of consumer expenditure. As I said during the Third Reading debate on the Finance Bill, in fact, contrary to general belief, the contribution of direct taxation, the proportion contributed by direct taxation, has increased rather than decreased over the last year. The idea that we put the whole burden on to the consumer is just not true. Reference has been made to a capital gains tax. I say to the Committee quite frankly that from my point of view it is a practical matter as to whether it is to the advantage of the country to have a capital gains tax.
In America they think it is and they have a schedule about a foot high of all the rules and regulations. It would involve a new and complicated system and a considerable drain on the administrative resources available. We should


find that all the best brains in the country would be concentrating at once on how legally to get round it. [HON. MEMBERS: "Oh."] Of course we should, and right hon. and hon. Members opposite would be in the lead.

Hon. Members: Resign.

The Deputy-Chairman (Major Sir William Anstruther-Gray): Order. I hope that the Committee will allow the right hon. Gentleman to deliver his speech.

Hon. Members: Resign.

Mr. Lloyd: If night hon. and hon. Gentlemen opposite really think that they would not like paying as few taxes as posible they are deceiving themselves. [HON. MEMBERS: "Oh."] I said "legally", and we should have everybody seeing whether within the law they could get round the procedure. We should have to have a limit and we should have exceptions. We should have to have a sliding scale and in my view—I look at this purely from the practical point of view—I do not think that it would be worth-while. I can see the psychological advantage, but I think, as I indicated in my Budget speech, the better approach is to see whether certain tax-free profits can be brought within the existing system of taxation. That is the better approach.
With regard to exports the right hon. Gentleman referred to salesmanship. In the first speech which I made to the National Production Advisory Council on Industry I dealt with the matter and I said very much what he has repeated today about the need to increase professionalism in exporting and to raise the standard of salesmanship. But I think that we have to face the fact that we cannot achieve stability, let alone speed up our economic growth, until we have made an improvement in our export performance far beyond anything which we have yet achieved. We need a tougher and more competitive spirit in industry. We need a much more critical

attitude towards costs whatever the origin, and a relentless rooting out of inefficiency—[HON. MEMBERS: "Hear, hear."]—and of restrictive practices by management and labour.

Things have been too easy in the home market, and export costs must be reduced. The right hon. Gentleman the Leader of the Opposition talked about the old, dreary collection of familiar expedients. He listed them and said that some may be necessary. I do not comment today, except on what I regard as a national weakness. When we have averted a short-term crisis, we rather tend to sit back and 'congratulate our selves. [Interruption.] Really, the memories of hon. and right hon. Gentlemen opposite are very short, because during their period of administration we had considerable experience of this. On at least two occasions, when short-term crises were averted, there was this feeling that there was nothing really to worry about.

Hon. Members: Resign.

Mr. Lloyd: I have tried throughout the speeches I have made to stress the point that this is not just a short-term problem. It is the long-term trends that matter, and I would fail in my purpose next Tuesday if what I put forward is regarded as just a short-term measure. I am determined, and I believe that it is the wish of the whole Committee, that we should improve our prospects in the long term, and to meet that challenge I shall not be afraid to ask for the necessary burdens and disciplines to be accepted.

Mr. H. Wilson: Despite the remarkable admissions of the Chancellor, and because of his entire failure to meet the points put forward in the debate, I beg to move,
That Item Class I, Vote 3, Treasury and Subordinate Departments, be reduced by £5.

Question put:—

The Committee divided: Ayes 243, Noes 329.

Division No. 253.]
AYES
[9.58 p.m.


Abse, Leo
Bacon, Miss Alice
Blyton, William


Ainsley, William
Baxter, William (Stirlingshire, w.)
Boardman, H.


Albu, Austen
Bellenger, Rt. Hon. F. J.
Bowden, Herbert W. (Leics, S.W.)


Allaun, Frank (Salford, E.)
Bence, Cyril
Bowen, Roderic (Cardigan)


Allen, Scholefield (Crewe)
Benson, Sir George
Bowles, Frank


Awbery, Stan
Blackburn, F.
Boyden, James




Braddock, Mrs. E. M.
Hughes, Cledwyn (Anglesey)
Popplewell, Ernest


Brockway, A. Fenner
Hughes, Emrys (S. Ayrshire)
Prentice, R. E.


Broughton, Dr. A. D. D.
Hughes, Hector (Aberdeen, N.)
Price, J. T. (Westhoughton)


Brown, Alan (Tottenham)
Hunter, A. E.
Probert, Arthur


Brown, Rt. Hon. George (Belper)
Hynd, H. (Accrington)
Proctor, W. T.


Brown, Thomas (Ince)
Hynd, John (Attercliffe)
Pursey, Cmdr. Harry


Butler, Herbert (Hackney, C.)
Irvine, A. J. (Edge Hill)
Randall, Harry


Butter, Mrs. Joyce (Wood Green)
Irving, Sydney (Dartford)
Rankin, John


Callaghan, James

Redhead, E. C.


Castle, Mrs. Barbara
Janner, Sir Barnett
Reid, William


Chapman, Donald
Jay, Rt. Hon. Douglas
Reynolds, G. W.


Chetwynd, George
Jeger, George
Rhodes, H.


Cliffe, Michael
Jenkins, Roy (Stechford)
Roberts, Albert (Normanton)


Collick, Percy
Johnson, Carol (Lewisham, S.)
Roberts, Goronwy (Caernarvon)


Corbet, Mrs. Freda
Jones, Rt. Hn. A. Creech (Wakefield)
Robertson, John (Paisley)


Craddock, George (Bradford, S.)
Jones, Dan (Burnley)
Robinson, Kenneth (St. Pancras, N.)


Cronin, John
Jones, Elwyn (West Ham, S.)
Ross, William


Crosland, Anthony
Jones, Jack (Rotherham)
Royle, Charles (Salford, West)


Crossman, R. H. S.
Jones, J. Idwal (Wrexham)
Shinwell, Rt. Hon. E.


Cullen, Mrs. Alice
Jones, T. W. (Merioneth)
Short, Edward


Darling, George
Kelley, Richard
Silverman, Jullus (Aston)


Dairies, Rt. Hn. Clement (Montgomery)
Kenyon, Clifford
Silverman, Sydney (Nelson)


Davies, G. Elfed (Rhondda, E.)
Key, Rt. Hon. C. W.
Skeffington, Arthur


Davies, Harold (Leek)
King, Dr. Horace
Slater, Mrs. Harriet (Stoke, N.)


Davies, Ifor (Gower)
Lawson, George
Slater, Joseph (Sedgefield)


Davies, S. O. (Merthyr)
Ledger, Ron
Small, William


Deer, George
Lee, Frederick (Newton)
Smith, Ellis (Stoke, S.)


Delargy, Hugh
Lee, Miss Jennie (Cannock)
Snow, Julian


Dempsey, James
Lever, Harold (Cheetham)
Sorensen, R. W.


Diamond, John
Lever, L. M. (Ardwick)
Soskice, Rt. Hon. Sir Frank


Dodds, Norman
Lewis, Arthur (West Ham, N.)
Spriggs, Leslie


Donnelly, Desmond
Lipton, Marcus
Steele, Thomas


Driberg, Tom
Logan, David
Stewart, Michael (Fulham)


Dugdale, Rt. Hon. John
Loughlin, Charles
Stonehouse, John


Ede, Rt. Hon. C
Mabon, Dr. J. Dickson
Stones, William


Edelman, Maurice
McCann, John
Strachey, Rt. Hn. John


Edwards, Rt. Hon. Ness (Caerphilly)
MacColl, James
Strauss, Rt. Hn. G. R. (Vauxhall)


Edwards, Robert (Bilston)
Mclnnes, James
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Edwards, Walter (Stepney)
McKay, John (Wallsend)
Swain, Thomas


Evans, Albert
Mackie, John (Enfield, East)
Swingler, Stephen


finch, Harold
McLeavy, Frank
Sylvester, George


Fitch, Alan
MacPherson, Malcolm (Stirling)
Taylor, Bernard (Mansfield)


Fletcher, Eric
Mallalieu, E. L. (Brigg)
Thomas, George (Cardiff, W.)


Foot, Dingle (Ipswich)
Mallalieu, J. P. w. (Huddersfield, E.)
Thomas, Iorwerth (Rhondda, W.)


Foot, Michael (Ebbw Vale)
Manuel, A. c.
Thomson, G. M. (Dundee, E.)


Forman, J. C.
Mapp, Charles
Thornton, Ernest


Fraser, Thomas (Hamilton)
Marquand, Rt. Hon. H. A.
Thorpe, Jeremy


Gaitskell, Rt. Hon. Hugh
Marsh, Richard
Ungoed-Thomas, Sir Lynn


Galpern, Sir Myer
Mason, Roy
Wade, Donald


George, Lady Megan Lloyd (Crmrthn)
Mayhew, Christopher
Wainwright, Edwin


Ginsburg, David
Mellish, R. J.
Warbey, William


Gooch, E. G.
Mendelson, J. J.
Watkins, Tudor


Gordon Walker, Rt. Hon. P. C.
Milne, Edward J.
Weitzman, David


Gourlay, Harry
Mitchison, G. R.
Wells, Percy (Faversham)


Greenwood, Anthony
Monslow, Walter
Wells, William (Walsall, N.)


Grey, Charles
Moody, A. S.
White, Mrs. Eirene


Griffiths, Rt. Hon. James (Llanelly)




Griffiths, W. (Exchange)
Morris, John
Whitlock, William


Grimond, J.
Mort, D. L.
Wigg, George


Gunter, Ray
Moyle, Arthur
Wilcock, Group Capt. C. A. B.


Hale, Leslie (Oldham, W.)
Mulley, Frederick
Wilkins, W. A.


Hall, Rt. Hn. Glenvil (Colne Valley)
Neal, Harold
Willey, Frederick


Hamilton William (West Fife)
Noel-Baker, Francis (Swindon)
Williams, D. J. (Neath)


Hannan, William
Oliver, G. H.
Williams, Li. (Abertillery)


Mart Mrs. Judith
Oram, A. E.
Williams, W. R. (Openshaw)


Hayman, F. H.

Williams, W. T. (Warrington)



Oswald, Thomas
Wilson, Rt. Hon. Harold (Huyton)


Healey, Denis
Owen, Will
Winterbottom, R. E.


Henderson, Rt. Hn. Arthur (Rwly Regis)
Padley, W. E.
Woodburn, Rt. Hon. A.


Herbison, Miss Margaret
Pannell, Charles (Leeds, W.)
Woof, Robert


Hewitson, Capt. M.
Pargiter, G. A.
Wyatt, Woodrow


Hill, J. (Midlothian)
Parker, John
Yates, Victor (Ladywood)


Hilton, A. V.
Parkin, B. T.
Zillacus, K.


Holman, Percy
Pavitt, Laurence



Holt, Arthur
Pearson, Arthur (Pontypridd)
TELLERS FOR THE AYES:


Houghton, Douglas
Peart, Frederick
Mr. John Taylor and


Howell, Charles A. (Perry Barr)
Pentland, Norman
Mr. G. H. R. Rogers.


Howell, Denis (Small Heath)
Plummer, Sir Leslie





NOES


Agnew, Sir Peter
Arbuthnot, John
Barlow, Sir John


Aitken, W. T.
Ashton, Sir Hubert
Barter, John


Allan, Robert (Paddington, s.)
Atkins, Humphrey
Batsford, Brian


Allason, James
Balniet, Lord
Baxter, sir Beverley (Southgate)


Amery, Rt. Hon. Julian
Barber, Anthony
Beamish, Col. Sir Tufton







Bell, Ronald
Glyn, Dr. Alan (Clapham)
McLaren, Martin


Bennett, Dr. Reginald (Gos &amp; Fhm)
Glyn, Sir Richard (Dorset, N.)
McLaughlin, Mrs. Patricia


Berkeley, Humphry
Godber, J. B.
Maclay, Rt. Hon. John


Bevins, Rt. Hon. Reginald
Goodhart, Philip
Maclean, Sir Fitzroy (Bute&amp;N, Ayrs.)


Bidgood, John C.
Goodhew, Victor
Macleod, Rt. Hn. Iain (Enfield, W.)


Biggs-Davison, John
Gough, Frederick
McMaster, Stanley R.


Bingham, R. M.
Gower, Raymond
Macmillan, Rt. Hn. Harold (Bromley)


Bishop, F. P.
Grant, Rt. Hon. William
Macmillan, Maurice (Halifax)


Black, Sir Cyril
Grant-Ferris, Wg Cdr. R.
Maddan, Martin


Bossom, Clive
Green, Alan
Maginnis, John E.


Bourne-Arton, A.
Gresham Cooke, R.
Maitland, Sir John


Box, Donald
Grimston, Sir Robert
Manningham-Buller, Rt. Hn. Sir R.


Boyd-Carpenter, Rt. Hon. John
Grosvenor, Lt.-Col. R. G.
Markham, Major Sir Frank


Boyle, Sir Edward
Gurden, Harold
Marlowe, Anthony


Brewis, John
Hall, John (Wycombe)
Marples, Rt. Hon. Ernest


Bromley-Davenport, Lt.-Col. Sir Walter
Hamilton, Michael (Wellingborough)
Marshall, Douglas


Brooke, Rt. Hon. Henry
Hare, Rt. Hon. John
Marten, Neil


Brooman-White, R.
Harris, Frederic (Croydon, N.W.)
Mathew, Robert (Honiton)


Browne, Percy (Torrington)
Harris, Reader (Heston)
Matthews, Gordon (Meriden)


Bryan, Paul
Harrison, Brian (Maldon)
Maudling, Rt. Hon. Reginald


Buck, Antony
Harrison, Col. Sir Harwood (Eye)
Mawby, Ray


Bullard, Denys
Harvey, Sir Arthur Vere (Macclesf'd)
Maxwell-Hyslop, R. J.


Bullus, Wing-Commander Eric
Harvey, John (Walthamstow, E.)
Mills, Stratton


Burden, F. A.
Harvie Anderson, Miss
Montgomery, Fergus


Butcher, Sir Herbert
Hastings, Stephen
Moore, Sir Thomas (Ayr)


Butler, Rt. Hn. R. A. (Saffron Walden)
Hay, John
More, Jasper (Ludlow)


Campbell, Sir David (Belfast, S.)
Heald, Rt. Hon. Sir Lionel
Morgan, William


Campbell, Gordon (Moray &amp; Nairn)
Hendry, Forbes
Morrison, John


Carr, Compton (Barons Court)
Hiley, Joseph
Mott-Radclyffe, Sir Charles


Carr, Robert (Mitcham)
Hill, Dr. Rt. Hon. Charles (Luton)
Nabarro, Gerald


Cary, Sir Robert
Hill, Mrs. Eveline (Wythenshawe)
Nicholls, Sir Harmar


Channon, H. P. G.
Hill, J. E. B. (S. Norfolk)
Nicholson, Sir Godfrey


Chataway, Christopher
Hinchingbrooke, Viscount
Noble, Michael


Chichester-Clark, R.
Hirst, Geoffrey
Nugent, Sir Richard


Clark, Henry (Antrim, N.)
Hobson, John
Oakshott, Sir Hendrie


Clark, William (Nottingham, S.)
Hocking, Philip N.
Orr, Capt. L. P. S.


Clarke, Brig, Terence (Portsmth, W.)
Holland, Philip
Orr-Ewing, C. Ian


Cleaver, Leonard
Hollingworth, John
Osborn, John (Haslam)


Cole, Norman
Hope, Rt. Hon. Lord John
Osborne, Sir Cyril (Louth)


Cooke, Robert
Hopkins, Alan
Page, John (Harrow, West)


Cooper, A. E.
Hornby, R. P.
Page, Graham (Crosby)


Cordeaux, Lt.-Col. J. K.
Hornsby-Smith, Rt. Hon. Patricia
Pannell, Norman (Kirkdale)


Cordie, John
Howard, Hon. C. R. (St. Ives)
Partridge, E.


Corfield, F. V.
Howard, John (Southampton, Test)
Pearson, Frank (Clitheroe)


Costain, A. P.
Hughes Hallett, Vice-Admiral John
Peet, John


Coulson, J. M.
Hughes-Young, Michael
Percival, Ian


Courtney, Cdr. Anthony
Hurd, Sir Anthony
Peyton, John


Craddock, Sir Beresford
Hutchison, Michael Clark
Pickthorn, Sir Kenneth


Critchley, Julian
Iremonger, T. L.
Pike, Miss Mervyn


Crowder, F. P.
Irvine, Bryant Godman (Rye)
Pilkington, Sir Richard


Cunningham, Knox
Jackson, John
Pitman, Sir James


Curran, Charles
Jenkins, Robert (Dulwich)
Pitt, Miss Edith


Currie, G. B. H.
Jennings, J. C.
Powell, Rt. Hon. J. Enoch


Dalkeith, Earl of
Johnson, Dr. Donald (Carlisle)
Price, David (Eastleigh)


Dance, James
Johnson, Eric (Blackley)
Price, H. A. (Lewisham, w.)


d'Avigdor-Goldsmid, Sir Henry
Johnson Smith, Geoffrey
Prior, J. M. L.


Deedes, W. F.
Jones Rt. Hn. Aubrey (Hall Green)
Profumo, Rt. Hon. John


de Ferranti, Basil
Joseph, Sir Keith
Proudfoot, Wilfred


Digby, Simon Wingfield
Kaberry, Sir Donald
Pym, Frances,


Doughty, Charles
Kerans, Cdr. J. S.
Quennell, Miss J. M.


Drayson, G. B.
Kerby, Capt. Henry
Ramsden, James


du Cann, Edward
Kerr, Sir Hamilton
Rawlinson, Peter


Duncan, Sir James
Kershaw, Anthony
Redmayne, Rt. Hon. Martin


Duthie, Sir William
Kimball, Marcus
Rees, Hugh


Eccles, Rt. Hon. Sir David
Kirk, Peter
Rees-Davies, W. R.


Eden, John
Kitson, Timothy
Renton, David


Elliot, Capt. Walter (Carshalton)
Lagden, Godfrey
Ridsdale, Julian


Elliott, R. W.(Nwcstle-upon-Tyne, N.)
Lancaster, Col. C. G.
Rippon, Geoffrey


Emmet, Hon. Mrs. Evelyn
Langford-Holt, J.
Roberts, Sir Peter (Heeley)


Errington, Sir Eric
Leather, E. H. C.
Robinson, Sir Roland (Blackpool, S.)


Erroll, Rt. Hon. F. J.
Leavey, J. A.
Robson Brown, Sir William


Farey-Jones, F. W.
Leburn, Gilmour
Rodgers, John (Sevenoaks)


Farr, John
Legge-Bourke, Sir Harry
Roots, William


Fell, Anthony
Lewis, Kenneth (Rutland)
Ropner, Col. Sir Leonard


Fisher, Nigel
Lilley, F. J. P.
Royle, Anthony (Richmond, Surrey)


Fletcher-Cooke, Charles
Lindsay, Martin
Russell, Ronald


Forrest, George
Linstead, Sir Hugh
Scott-Hopkins, James


Foster, John
Litchfield, Capt. John
Seymour, Leslie


Fraser, Hn. Hugh (Stafford &amp; Stone)
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Sharples, Richard


Fraser, Ian (Plymouth, Sutton)
Lloyd, Rt. Hon. Selwyn (Wirral)
Shaw, M.


Freeth, Denzil
Longbottom, Charles
Shepherd, William


Galbraith, Hon. T. G. D.
Longden, Gilbert
Simon, Rt Hon. Sir Jocelyn


Gammans, Lady
Loveys, Walter H.
Skeet, T. H. H.


Gardner, Edward
Low, Rt. Hon. Sir Toby
Smith, Dudley (Br'ntf'rd &amp; Chiswick)


George, J. C. (Pollok)
Lucas-Tooth, Sir Hugh
Smithers, Peter


Glover, Sir Douglas
McAdden, Stephen
Smyth, Brig. Sir John (Norwood)







Soames, Rt. Hon. Christopher
Thomas, Peter (Conway)
Watkinson, Rt. Hon. Harold


Spearman, Sir Alexander
Thompson, Kenneth (Walton)
Webster, David


Speir, Rupert
Thompson, Richard (Croydon, S.)
wells, John (Maidstone)


Stanley, Hon. Richard
Thorneycroft, Rt. Hon. Peter
Whitelaw, William


Stevens, Geoffrey
Thornton-Kemsley, Sir Colin
Williams, Dudley (Exeter)


Steward, Harold (Stockport, S.)
Tiley, Arthur (Bradford, W.)
Williams, Paul (Sunderland, S.)


Stodart, J. A.
Turner, Colin
Wills, Sir Gerald (Bridgwater)


Stoddart-Scott, Col. Sir Malcolm
Turton, Rt. Hon. R. H.
Wilson, Geoffrey (Truro)


Storey, Sir Samuel
Tweedsmuir, Lady
Wise, A. R.


Studholme, Sir Henry
van Straubernzee, w. R.
Wolrige-Gordon, Patrick


Summers, sir Spencer (Aylesbury)
Vane, W. M. F.
Wood, Rt. Hon. Richard


Sumner, Donald (Orpington)
Vaughan-Morgan, Rt. Hon. Sir John
Woodhouse, C. M.


Talbot, John E.
Vosper, Rt. Hon. Dennis
Woodnutt, Mark


Tapsell, Peter
Wakefield, Edward (Derbyshire, W.)
Woollam, John


Taylor, Sir Charles (Eastbourne)
Wakefield, Sir Wavell (St. M'lebone)
Worsley, Marcus


Taylor, w. J. (Bradford, N.)
Walder, David
Yates, William (The Wrekin)


Teeting, William
Walker, Peter



Temple, John M.
Walker-Smith, Rt. Hon. Sir Derek
TELLERS FOR THE NOES:


Thatcher, Mrs. Margaret
Wall, Patrick
Mr. Finlay and Mr. Gibson-Watt.


Thomas, Leslie (Canterbury)
Ward, Dame Irene

Original Question again proposed.

Mr. Ray Mawby: Mr. Ray Mawby (Totnes) rose—

It being after Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report Progress; to sit again Tomorrow.

NATIONAL ASSISTANCE (MR. KENYON)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chichester-Clark.]

10.10 p.m.

Mr. Leslie Spriggs: I gave notice on 3rd July that I intended at the earliest possible moment to raise the case of Claud Kenyon because of the Parliamentary Secretary's unsatisfactory reply to a Question. The House should first be told something of the case history of this man. It is a history of serious sickness since infancy and a long struggle to obtain National Assistance from the Board.
Claud Kenyon's record from 1946 to 1949 was one of continuous unemployment. From 1949 to 1953, National Assistance was granted. Since 1953, when a tribunal decided that assistance should cease unless the man went to a rehabilitation centre, which he refused to do, no assistance has been received. From 1953 to 1960, his older brother, a registered disabled person, maintained him completely, providing shelter, food and clothing. There was an exception for nine weeks, when the National Assistance Board provided sickness grants amounting to 46s. a week. In December, 1959, Claud Kenyon also received a

footwear grant of £3. With the exception of those amounts, he received nothing for seven years.
In the early part of 1960, I advised this man to apply again for assistance. He did so, but was refused because of his continued refusal to enter a rehabilitation centre. I advised him to appeal. He did so in April, 1960, and the appeal was allowed. Previous decisions were reversed on appeal because of evidence that I put before the tribunal as Kenyon's spokesman. I had travelled overnight to take his case 'because there was no one else to assist him, and I appreciated that this young man was then badly in need of support.
He had Fart-time employment as a caretaker from July, 1954, to December, 1954, earning 20s. a week for 18 weeks. He again applied for National Assistance, but this was refused as it was considered that my constituent was out of full-time employment of his own volition. In 1960, Mr. Kenyon again commenced part-time work as a caretaker. He again applied for assistance, but was again refused. As I have said, he appealed against the decision, and the appeal was allowed. He later applied for a boat allowance, but this was refused because he was receiving 15s. above the subsistence standard.
For several years this young man was maintained by an older brother who, without doubt, was really unable to maintain himself. He is a registered disabled person suffering from stomach ulcers, but because of his knowledge of his younger brother's ill health from infancy he was determined that the boy would not be taken to a rehabilitation centre in his condition. It was because of this determination that he and the


rest of the family did what they could. There are three in the family—two brothers and one sister. The sister is an epileptic, the older brother has ulcers, and the young brother, of whom I am now speaking, has suffered ill health from infancy.
When one looks at this case, one sees that this young man owes hundreds of £s to his elder brother for maintenance alone, Financial crises have been the order of the day in this small family for many years. Can an authority come down to earth in such exceptional cases as these of sickness and poverty? Surely one has a right to expect a more common-sense attitude to be shown in this young man's case. A grant would be welcome to my constituent and his brother would go a long way towards clearing the good name of Claud Kenyon and would see that justice is done in this most worthy case.
It may be that the Parliamentary Secretary does not know the actual circumstances surrounding this young man. This has been going on for so many years before I went to St. Helens that I was determined to get to the bottom of this case. It was, therefore, essential to have a medical report about him.
The following is a letter concerning Claud Kenyon which was written by one of our top specialists in the National Health Service:
Re: Claude Kenyon, 139, Gladston Street, St. Helens. Thank you for referring Mr. Kenyon, whom I well recall seeing previously in 1953. At that time I considered he had a personality defect, and which reflected itself in many mental and physical symptoms, These are more or less unchanged with the passage of years, and take the form nowadays of restlessness, agitation, defective concentration, palpitations, 'black-outs', sweating attacks, etc. Perhaps most important of all is a deep dread that his heart action will fail entirely. In addition he has a moderate defect of locomotion, due to congenital abnormality of his feet. I think his disability is considerable, and that he is unlikely ever to be able to compete on equal terms with his fellows, either in employment or socially. He is probably fit to perform light work of a non-competitive character, but it is doubtful whether he could maintain reasonable continuity of effort. In my view he is now a sick person, but his disability is unlikely to be materially benefited either by medication or by industrial training and rehabilitation. I think his present part-time work of caretaker at the Society of Friends is appropriate, and more ambitious employment is unlikely to succeed.

It is essential to cast one's mind over that letter and to remember exactly what the specialist says. This matter goes back for years, yet this young man has been struggling to prove his case. He failed year after year until I was able to advise him on the action he should take.
With the help of this specialist—and I am given to understand that the National Assistance Board have accepted this medical report—I wish tonight to appeal to the Parliamentary Secretary to do all that she can to alleviate the distress for this family and to remove anything that may be said or inferred against it because this young man has not worked for so many years. I can assure the Parliamentary Secretary that from the first time I saw this man, in early 1959, I was able to see for myself that he was a very sick person. Here is an opportunity without, I am sure, upsetting any previous decisions of tribunals, for the Parliamentary Secretary to help this young man and his family.

10.20 p.m.

The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Miss Patricia Hornsby-Smith): The hon. Member for St. Helens (Mr. Spriggs) has spoken very movingly about this case, and I am sorry that I cannot go all the way with him in his argument. He will appreciate that whilst my right hon. Friend has a responsibility for answering Questions in this House concerning the National Assistance Board, that statutory body is a separate and independent entity entirely responsible for its own administrative decisions, in which my right hon. Friend has no power to intervene.
I think in fairness to the normal procedure that we follow in this matter I should say that, as the hon. Member will be aware, in cases such as this we normally endeavour to maintain the anonymity of the applicant. In this case—and it is entirely up to him—the hon. Member has given quite wide publicity to the identity of the applicant, but I am afraid that does not relieve me of my duty to produce the evidence as I know it in support of the Board's action.
The case of Mr. Claude Kenyon has been the subject of interest and sympathetic investigation over very many years. I have read vast files on this


case, and from the records I can say without qualification that the fullest medical advice has been sought at all times by the officers of the National Assistance Board who have made their decisions in the light of that medical evidence.
Mr. Kenyon is 33 years old. For four years, from 1949 to 1953, he was unemployed and, as the hon. Member rightly said, in receipt of a grant from the National Assistance Board. Then the Board's Advisory Committee recommended that he should be refused assistance as he was unemployed of his own volition. At that time the man's own practitioner reported, in a certificate dated 31st July, 1953, that he thought Mr. Kenyon was able to follow a light occupation. The local authority offered him a job which he refused.
The hon. Member will know that, by and large, local authorities are understanding and fair-minded employers. They habitually employ a quota of disabled or partially disabled men, and I am sure they would have been reasonable and understanding had Mr. Kenyon made even an endeavour to accept this employment. Nevertheless he refused. He exercised his right, quite properly, to take his case to appeal, and the appeal tribunal confirmed the Board's decision.
During the period from then till April, 1960, some six years in all, he twice received assistance for about a month, but was otherwise subject to what is known as a direction order under Section 10 of the National Assistance Act, 1948, which covered the periods from May to November, 1954, October, 1956, to April, 1957, October, 1957, to October, 1958, and June, 1959, to April, 1960.
Section 10 empowers the Board to make a report to the local National Assistance appeal tribunal where it appears that an applicant for assistance is refusing or neglecting to maintain himself, and the tribunal may then make a direction enabling the Board's officer to decide that assistance shall be given only in the form of maintenance at a re-establishment centre. The practical effect is that if an applicant without dependants refuses to go to a re-establishment centre, he ceases to receive any form of assistance.
May I say a word about the re-establishment centres? I have spent some hours on more than one occasion visiting our re-establishment centres. I know they are run by enlightened and most sincere men whose only desire is to help these unfortunate men to repair their confidence, skill and physique so that if possible they can stand on their own feet again. I accept that to send a man who has been out of work for many years straight into an ordinary competitive job is asking for trouble. His muscles have gone slack, he has lost the habit of getting up early in the morning or working to a timetable. He may even be physically incapable of plunging into an eight-hour day. Thus, after long illness or unemployment, it is entirely in the interests of the man, if he genuinely desires to strive to maintain himself, that he should at least try to make the experiment of going to a re-establishment centre.
I have myself seen cases of men after long illness, having lost all their confidence, being most sympathetically eased into the routine of employment again. I have seen them in the centres allowed to do, perhaps, only two hours' work on the first day because of their physical weakness and their slack muscles, and thereafter gradually eased into the routine of employment. There may be three hours of work, and gradually the work is extended as they obtain confidence in themselves and their ability returns.
I readily admit that the Board is not successful in every case. There are folk too simple-minded to be regularly employed. There are people whom severe illness or advancing age have put beyond the stage of full rehabilitation. But if that is proven—and it is in the interests of the general body of the community and of the taxpayers in particular that it should be proven—the Board accepts it and such men are thereafter accepted an unemployable. The Board's efforts in rehabilitation are highly successful in a very large number of cases, as its recently published Annual Report demonstrates.
Thus, in his own interests, Mr. Kenyon had everything to gain and nothing to lose by co-operating with the Board and agreeing to go to a re-establishment centre. As it was, he persistently refused over the years. During the periods not


covered by the Section 10 direction, he made several applications for assistance, but, apart from those which resulted in payment for two months, all these applications were refused. They were refused because, although several examinations by the regional medical officers of the Ministry of Health had shown that he was not incapable of some form of work, it appeared that Mr. Kenyon had no intention of seeking employment. Apart from a few months of part-time work as a caretaker in 1955, he did no work at all from 1954 onwards.
The hon. Member has misjudged the result of the recent appeal tribunal. The present assistance grant was put into payment in April, 1960, as a result of an application by Mr. Kenyon to the appeal tribunal, as the hon. Member rightly said, which led to the revocation of the then current Section 10 direction on the ground that, by taking his present part-time job, he had shown evidence of willingness to work, which had not previously been apparent.
The hon. Member's case appears to be that, throughout the period when Mr. Kenyon was without assistance from the Board, he was incapable of work or capable at the very most of limited work, and he had to be supported by his brother. His argument is that, having now recognised and accepted his need of assistance by issuing the present grant, the Board ought to make a lump sum payment of arrears for the period from 1953 to 1960.
With great respect to the hon. Gentleman, this is wrongly to equate two very different sets of circumstances. The Board did not reverse any of their previous decisions. During the earlier period when Mr. Kenyon came under a Section 10 direction, he refused to work and he refused to go to a re-establishment centre. His present part-time job showed his willingness to work, which, therefore, made it reasonable and proper to remove the Section 10 direction.
One of the offers of attendance at a re-establishment centre was made after a special medical examination. Furthermore, Mr. Kenyon was told that there was a doctor at the centre who could arrange for any necessary medical treatment and who could from day to day assess whether he was in fact capable of light employment or not. The fact that

he could be helped by going to the centre where all his requirements would be met was repeatedly made clear by the Board's officer to him and to his brother, but he chose not to take advantage of the offer. The Board cannot be held responsible for his failure to do so.
I believe that the decisions on the other applications made by Mr. Kenyon were appropriate in the light of the knowledge the Board's officer then had of Mr. Kenyon's attitude to work and of the results of examinations by the regional officers of the Ministry of Health. The current grant, which was put into operation in April, 1960, was the result of a decision of the tribunal, but the decision was not retrospective, and the Board itself has no power to revise the earlier decisions of its officer, even if it wished to do so. Again, I say that the current grant is the direct result of Mr. Kenyon, after thirteen years of almost continuous unemployment, at last agreeing to take some light work. It in no way upsets or, in my view, alters the validity of the previous decisions, which is what the hon. Member is seeking to prove.
The consultant physician's letter of 20th December, 1960, which was produced by the hon. Member, in spite of its qualifications, says that Mr. Kenyon is probably fit to perform light work of a non-competitive character. In his letter, the consultant physician refers to his recollection of seeing Mr. Kenyon in 1953. Mr. Kenyon's own doctor gave a certificate at this time, as I have said, that he was fit for light work and also recorded that the consultant physician had certified him as fit.
Mr. Kenyon has also been referred to the divisional medical officer seven times since 1953 for an opinion on incapacity, and on each of the six occasions on which he was examined—once he did not attend—he was found fit to undertake light work. The examinations were carried out by five different doctors so there is no question of only one opinion. Mr. Kenyon has had five separate, authoritative and independent opinions during this period on his medical status. On only two occasions out of the six was the examining doctor the same person.
In September, 1958, the examining doctor said that not only was Mr. Kenyon capable of work but that he would be all the better for it. I know that after many


years one loses confidence and gets slackness of muscle and it seems more and more difficult to go to work, but that is where the value of the re-establishment centre comes in. At these centres, with all the medical advice available, we can genuinely seek to help people who, I quite accept, might, if they plunged back into an ordinary industrial job, be a very bad bet for an employer until they had had the opportunity of re-establishment and of gradually working themselves back into the routine of employment.
In September, 1958, the examining doctor, as I have said, gave it as his opinion that Mr. Kenyon would be all the better for being in some form of employment. Neither the medical report which the hon. Member has produced nor any of the earlier examinations cast doubt on the past treatment of the case, nor do they support the view that Mr. Kenyon has throughout, as the hon. Member seeks to establish, been incapable of work.
The Board has all along sought medical opinion. This has not been the case of an official making a decision on his own. At every stage over the years this man has been medically examined, and the Board has had the advice of highly skilled and competent medical officers of the Ministry of Health. Officials of the Board have shown their willingness to be guided by medical advice through their readiness to accept the consultant physician's opinion in December, 1960, that Mr. Kenyon is now capable only of his present part-time job. They cannot, however, accept, as the hon. Member invites them to do, that Mr. Kenyon has throughout been incapable of work.
All the evidence available between 1953 and 1960 shows that although he was fit for some kind of work he had no intention of taking a job. Nor would he take re-establishment and rehabilitation. During the period under dispute he refused a job with a local hospital on the flimsy excuse that he was too intelligent for it. In 1959, a member of the National Assistance Appeal Tribunal made a special personal effort to get him a light job in an industrial concern. This he refused.
This man's case has been fully and exhaustively considered, not only by the

Board's officers but, on appeal, by the independent tribunal and by numerous competent medical authorities. The decision of the tribunal was, of course, binding on the Board. Every endeavour has been made to help him, without success. He has refused work and reestablishment training, and has been wholly unto-operative with those who have genuinely sought to help him.
I can only confirm that, in my view, the Board has acted with great patience and understanding of this most difficult case, and that there are no grounds whatever for its taking—nor has it power to take—action other than that which it has done.

10.35 p.m.

Mr. Eric Fletcher: I can only say, having listened to this debate, that I regard the Minister's reply as wholly unsatisfactory. Why the right hon. Lady should think it her duty always on occasions of this kind to whitewash the National Assistance Board I cannot understand. I listened to the speech of my hon. Friend the Member for St. Helens (Mr. Spriggs) and to her reply, and it seemed obvious after listening to those speeches that this man has made every effort to do some work.

Miss Hornsby-Smith: With great respect, this man has not been employed for eleven years. I cannot accept the the statement of the hon. Member for Islington, East (Mr. Fletcher).

Mr. Fletcher: He has taken a job as a part-time caretaker. When my hon. Friend takes the trouble to investigate a case of this kind where there has been manifest hardship, a man has obviously tried to do something and his own family has been put to great expense—and they are persons who are epileptic—why the Minister should adopt this bureaucratic attitude and always try to defend the National Assistance Board I do not know. Why she cannot exercise a little humanity and investigate the case I cannot understand. I have no doubt that generally the National Assistance Board does a great job, but on occasion it can make mistakes, and hon. Members do not take the trouble to investigate individual cases as my hon. Friend has done unless there is some real substance and justification for doing so.
What disappoints me is that over and over again when hon. Members take the pains to investigate cases of real hardship—we do not bring them to the House otherwise—we always get this bureaucratic attitude from the Minister saying that everything the Board has done is right. This man has appealed against decisions over and over again and on occasion appeals have been upheld. I hope the Minister will reconsider what I regard as a most unworthy speech which has shown no indication of sympathy for this man. There may be psychological and other factors which have quite justified him in refusing to go to a rehabilitation centre. We cannot put all these people into one category and generalise about them as the Minister has done. We have to treat them as human beings.
When we bring these cases to the House we are entitled to have a more sympathetic and humane reply than we have had tonight. I am most disappointed. I hope that, in view of what my hon. Friend hats said, the matter will not be allowed to rest there, but that the Minister will take the trouble to lead what my hon. Friend said and investigate it to see if something cannot be done to relieve this man and his family from the great hardship they have suffered.

Miss Hornsby-Smith: With great respect, I really cannot allow the hon. Member to get away—

Mr. Speaker: Order. The right hon. Lady cannot speak again except with the leave of the House as she has already spoken once.

Miss Hornsby-Smith: With your permission, Mr. Speaker, and the leave of the House, I should like to reply to what I consider to be a most unwarranted accusation against the National Assistance Board. This case has gone to an independent tribunal time and time again, and the decisions of those independent statutory authorities the Board has to accept. This man has been repeatedly examined by independent medical officers who are not members of the staff of the National Assistance Board.
I regret very much that the hon. Member for Islington, East (Mr. Fletcher), with the experience he has, should have made such an unwarranted attack on the Board, which throughout has done its best to help this man and has carried out it statutory duties and the findings of independent statutory authorities which have investigated this case.

Question put and agreed to.

Adjourned accordingly at twenty-one minutes to Eleven o'clock.